Lord Howarth of Newport

The Right Honourable Alan Thomas Howarth, CBE, having been created Baron Howarth of Newport, of Newport in the County of Gwent, for life—Was, in his robes, introduced between the Baroness Hollis of Heigham and the Lord Ashley of Stoke.

Lord Foster of Bishop Auckland

The Right Honourable Derek Foster, having been created Baron Foster of Bishop Auckland, of Bishop Auckland in the County of Durham, for life—Was, in his robes, introduced between the Lord Burlison and the Lord Sawyer.
	The Lord Bishop of Truro—took the Oath.

Local Government Funding

Lord Steinberg: asked Her Majesty's Government:
	What plans they have for the introduction of a local income tax.

Lord McKenzie of Luton: My Lords, the Government are committed to retaining but reforming council tax. The independent inquiry into local government funding, led by Sir Michael Lyons, is considering the case for both reforms to council tax and options other than council tax for local authorities to raise supplementary revenue. The inquiry will report by the end of the year.

Lord Steinberg: My Lords, I am grateful for that reply. Will the Minister give me the same short reply and say that the Government will not increase national insurance contributions? Will the Government also give an assurance about road taxes, 4 x 4 four vehicles, second homes and a council tax on improvements to homes? Over 70 stealth taxes have appeared, and I think that the Government are now scraping the barrel.

Lord McKenzie of Luton: My Lords, I thought that the Question was about a local income tax. I ask the noble Lord in that regard to await the outcome of the Lyons report and the Government's response to it. On the other issues about taxation that he raised, I am sure he will be aware that nobody would make any commitment in respect of what will happen to future taxation in advance of budgets. But I remind the noble Lord that the Government have introduced a lower rate of income tax—we inherited a basic rate and a starting rate from the Conservative Government—the lowest rate of corporation tax since that tax was introduced, a lower effective capital gains rate for businesses than at any time in the tax's history and some other substantial tax benefits as well.

Lord Campbell-Savours: My Lords, is it true that one of the main beneficiaries under the local income tax is the self-employed, and for all the wrong reasons?

Lord McKenzie of Luton: My Lords, I thank my noble friend for the supplementary question. We are dealing with hypotheticals here. We do not know whether Sir Michael Lyons will recommend that a local income tax should be part of the system, and, if so, what the Government's response to that would be. I ask noble Lords to be a little patient because we will get those results in fairly short order.

Baroness Noakes: My Lords, the Minister said that the Government would retain council tax. My noble friend Lord Steinberg asked about the issue of home improvements and their impact on council tax. Will the Minister give an assurance that home improvements carried out will not result in people having to pay a higher rate of council tax?

Lord McKenzie of Luton: My Lords, council tax does not always increase as a result of home improvements; it depends on the nature of those improvements. Clearly home improvements can give rise to an increase in the value of a property which would be taken into account in due course. Things like summer houses and sheds would not be included, but if the noble Lord is thinking of swimming pools and stables or workshops, that may be a different matter.

Lord Hogg of Cumbernauld: My Lords, does my noble friend agree with me that a good tax, if there is such a thing, is likely to be an old tax and that an old tax is likely to be a good tax? That is the case here. Property cannot run away. The ownership of property is a matter of record. Someone always owns up to owning property and therefore the tax is collectable. In any event, this idea was tested in the general election and the party which advocated it was soundly defeated.

Lord McKenzie of Luton: My Lords, I certainly agree with my noble friend that the rationale for retaining the council tax on a reformed basis is that it is easy to collect and predict. I would not agree with him that all old taxes are good taxes. We endured the poll tax for a number of years and I do not recommend a return to it.

Lord Newby: My Lords, the Minister has already said that the Lyons review is looking at local income tax as a possible component of a revised local taxation base and that the Government will look at the conclusions of the report. Can he go one step further and say that the Government have not ruled out a local income tax and, if Lyons were to recommend it, they would look at it seriously?

Lord McKenzie of Luton: My Lords, the noble Lord presses me on a matter that I thought I had dealt with. There are a number of "ifs" in his question and we have to wait to see what Sir Michael Lyons says in his report. When we know what the recommendations are, we can give the Government's response.

Baroness Hanham: My Lords, in view of the review of council tax, the possible rebanding and the certain revaluations, will the Government say whether there is any upper limit on the proportion of a person's income on which he or she would have to pay council tax?

Lord McKenzie of Luton: My Lords, the Government are committed to proceeding with revaluation, which was a commitment in the White Paper in 2001 and in the subsequent legislation. As to the impact of revaluation, the Government have made it clear that we will not raise more in council tax overall because of revaluation. The distribution within the revaluation remains to be seen.

Baroness Hanham: My Lords—

Noble Lords: Order!

Lord Stoddart of Swindon: My Lords, does the Minister agree that a local income tax could be very expensive to collect? Does he agree that the noble Lord, Lord Hogg, is absolutely right that a property tax for local taxation is a perfectly respectable and decent way of raising local income? Does he also agree that one of the ways of ensuring that it remains a proper, dynamic base is to relate it to the housing cost of living on a regional or area basis?

Lord McKenzie of Luton: My Lords, so far as a property-based tax is concerned, I agree, which is why the Government have concluded that they want to retain a council tax on a reformed basis. As the noble Lord said, a property-based tax is perfectly respectable. As regards the impact of banding, that is something that the Lyons report will look at. I ask the noble Lord to await the outcome of the report.

Lord Strathclyde: My Lords, will the Minister have another go at answering my noble friend's question? Will the Government set an upper limit on the proportion of a householder's income that he would pay in local taxation?

Lord McKenzie of Luton: My Lords, I do not think that the noble Lord can reasonably expect me to construct an income tax regime from the Dispatch Box. We have to see what is recommended for the structure of local income tax in due course and what the consequences of that are. The Government are committed in all things to a fair system of taxation.

Museums and Art Galleries: Security

Lord Harrison: asked Her Majesty's Government:
	Whether British art galleries and museums devote sufficient resources to ensuring the security of their collections.

Lord Evans of Temple Guiting: My Lords, the low level of theft from public art galleries and museums in the UK reflects the strong emphasis placed on security and suggests that the funding available is sufficient to minimise the risk. In 2003–04, 15 thefts were reported to the national security advisers. In 2004–05, there were just eight thefts at DCMS-sponsored museums and galleries. DCMS-sponsored museums spent £36.5 million on security in 2004–05, which is 13 per cent of their total grant-in-aid from government. These figures do not include the loss of two live guinea pigs from the Horniman Museum last year. Whether that was a theft or an elaborate escape plan remains unclear.

Lord Harrison: My Lords, in the light of recent thefts and the need to protect some £5 billion of treasures in our national museums, is my noble friend satisfied that the museums security officer, who has two members of staff to help him, has sufficient resources for the task of securing our museums and for the widening task of offering advice to our European colleagues on these matters? Will the Minister say a little more about regional museums? Do those valued museums in our regions enjoy the same level of security?

Lord Evans of Temple Guiting: My Lords, I can be totally reassuring about the national security advisers based at the Museums, Libraries and Archives Council because I used to chair that body and spent many happy hours talking to the security advisers and seeing what they did. They have a tremendous reputation in the UK, and they are very often asked for advice by overseas museums.
	As for the regions, there were 14 thefts from regional museums across the UK but, given that there are more than 1,800 accredited museums, that is not a large number. Local authorities are responsible for local museums and the security advisers feel that they do a really good job.

Lord Addington: My Lords, museums and galleries are under pressure to display their back catalogues or stored items. Will the Minister give an assurance that they will not have to increase the number of items on display unless they have sufficient resources to make sure that they are secure?

Lord Evans of Temple Guiting: My Lords, of course. When museums look at what they display, they carry out risk assessments and take relevant action. Obviously, if a small museum in one of the regions has an extremely valuable object, but does not feel that it can be protected adequately, it will be kept in safe storage.

Baroness Trumpington: My Lords, does the National Trust come into the deliberations of the Government? Some of the most beautiful and valuable things in this country are owned by the National Trust. It would be very sad if they were stolen or lost in a fire.

Lord Evans of Temple Guiting: My Lords, I do not have figures on the National Trust, but I know that it has its own highly effective security advisers. Certainly, national security advisers liaise with National Trust advisers. Obviously, I agree with the noble Baroness that many of our national treasures are held in National Trust houses.

Lord Maxton: My Lords, while it is important that we ensure the safety of our treasures in museums and galleries, is there not a danger that increasing expenditure on security will make access to those treasures by the general public more difficult? If money is to be available for museums and galleries, should we not spend it on improving access and educational services?

Lord Evans of Temple Guiting: My Lords, I agree with my noble friend. Access is of critical importance. Noble Lords will know that it was this Government who abolished entrance fees to increase the number of people visiting museums. On looking at the figures on theft, it is fascinating to see that most thefts occurred in places in museums where the general public do not go—areas that are not of great interest to them.
	A great deal of money is spent on museum security, which has been a constant during the past four or five years. If there is a problem with a museum, as there was with the V&A last year, additional resources are given to that museum to enhance its security.

Viscount Astor: My Lords, museum security very much depends on the resources available. Can the Minister give an assurance that national museums and galleries have been sufficiently compensated for the costs involved in introducing free admission?

Lord Evans of Temple Guiting: My Lords, that is a much bigger question, which I imagine may relate to the Science Museum. Whatever the arguments about funding of national museums, security cannot be skimped on. The sum of £37 million was spent on security. One museum, which I do not intend to name, spent £7.9 million on security last year. There is no need to worry about security at our museums.

Earl Ferrers: My Lords, does the noble Lord realise that he need not worry too much about security if he wishes more people to visit museums? Some years ago the Goya painting of the Duke of Wellington was purchased by a grateful nation and was hung in the National Gallery. Someone pinched it and more people went to see the place where the picture had hung than ever went to see the picture when it hung there.

Lord Evans of Temple Guiting: My Lords, I am aware of that. I am also aware that whenever a famous painting is stolen from anywhere in the world the same thing always applies. Apparently, more people are lining up in Oslo to see where "The Scream" was hung than were there before.

Time Signals

Lord Tanlaw: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I declare an interest as a fellow of the British Horological Institute.
	The Question was as follows:
	To ask Her Majesty's Government what steps they will take to address the problems caused by the difference of up to seven seconds between the BBC time signal received by digital and by analogue radio and television receivers.

Lord Davies of Oldham: My Lords, this is, of course, a matter for the BBC and not for the Government. Live digital broadcasts are delayed by a second or two when compared to analogue and by up to seven seconds for radio streamed via the Internet. While that slight and relative discrepancy is not a big issue for most viewers and listeners, it will obviously be a concern for those who rely on the six pips to get the time accurate to the second. There is no obvious solution. Even if the BBC were to broadcast the signal slightly earlier, there still would be an unavoidable and unpredictable delay occurring at the receiver end that was variable from one product to another.

Lord Tanlaw: My Lords, while thanking the Minister for his Answer, does he not agree that this is the first time that the integrity of the BBC's time signal has ever been questioned? It is sending out two time signals: one is for analogue radios, which is the correct time up to 1/5,000th of a second; the other signal is digital which is erratic, as the Minister explained. Instead of questioning the integrity of clock and watch manufacturers, is not the simple answer that the BBC ceases to transmit the six pips to digital receivers and gives a spoken statement? It can be extremely misleading and may lead to many accidents.

Lord Davies of Oldham: My Lords, there is a balance to be struck in relation to the noble Lord's clear concern about accuracy. If that concern was the total premium, the digital pips would have to disappear. It may be that that will have to happen. The BBC is looking at the situation to see whether there is any engineering solution or whether to continue with the service on the grounds that, for the vast majority of viewers and listeners, the pips on digital give a fairly clear indication of the time.

Viscount Astor: My Lords, does the Minister agree that the noble Lord, Lord Tanlaw, has done this House a service by bringing this issue to your Lordships' attention? The Minister explained that there are normally six pips to enable us to recognise the hour. Does he realise that once a year there are seven pips, usually on New Year's Eve, because the Earth's rotation is slowing down and a seventh pip is required, no doubt due to the Government's economic policy in that area? Does the Minister agree that we will forgive the BBC for being a couple of pips late if it returns the weather forecast to its original state on the television?

Lord Davies of Oldham: My Lords, I should confess that I am not a time lord and more of a Doctor Who—perhaps I should say "Lord Who". The answer to the noble Viscount's question is straightforward. Of course he is right. That adjustment has to be made because the Earth's travel around the Sun is not precise and we are not able to measure it with the precision that is indicated.
	We have, of course, got atomic clocks to which people can refer. The Great Clock of Westminster—sometimes referred to as Big Ben—is governed by that. Railway digital clocks are governed by a signal sent out from the National Physical Laboratory. So we maintain accurate time in this country, but there is a problem with regard to the broadcast. I am sorry if on this occasion I am obliged to give the noble Viscount the pip.

Baroness Bonham-Carter of Yarnbury: My Lords, according to a sports-loving friend of mine, there is some benefit to the delay. Apparently, if you nip quickly from a Sky digital broadcast to a BBC analogue one, you can see an instant replay. That sounds a little macho to me, but he swears that that is the case.
	On the move from analogue to digital on the national scale, it is to be welcomed that SwitchCo has now been launched to oversee the process and that we have a timetable. But can the Minister indicate what the Government propose to do, when analogue broadcast is finally switched off, to help those who either cannot afford or have chosen not to buy the necessary equipment to allow them to receive a digital signal? Is their switchover a cost that the Government envisage the BBC carrying?

Lord Davies of Oldham: My Lords, we have a timetable that is to begin in 2008 and will not be complete until 2012. The noble Baroness has raised some important points that we shall need to consider. We hope that we will have to deal with only a very small fraction of the public, those not able to avail themselves of digital services. We intend to address the question, but at present the move towards digital is extremely encouraging. Over 60 per cent of the nation already enjoys digital services.

Asylum Seekers: Amnesty International Report

Lord Avebury: asked Her Majesty's Government:
	What is their response to the recommendations in the Amnesty International report on asylum seekers in detention.

Baroness Scotland of Asthal: My Lords, we are currently studying the report in detail and welcome the opportunity it provides to have a debate about immigration and asylum issues. However, on initial consideration it is evident that Amnesty International takes a different position in principle on a range of issues. But this is a detailed report and we will need to consider its content and recommendations extremely carefully before responding in full.

Lord Avebury: My Lords, while noting the serious allegation made by Amnesty International that the Government are breaking the law by detaining people when there is no prospect of their removal or danger that they will abscond, will not the noble Baroness at least consult the UNHCR with a view urgently to produce a solution to the problem, thus ending unlawful detentions and complying with the UNHCR guidelines which have been in force since June 1999? Further, will she commission a report from an independent lawyer to be selected in consultation with the UNHCR on how the procedural and financial constraints on the availability of legal aid described in this report could be adjusted to ensure that detained asylum seekers receive effective legal advice and access to bail, in particular when they are outside London or in the deserts for the provision of legal aid in the north and elsewhere?

Baroness Scotland of Asthal: My Lords, first, the Government are considering the import of this report. I do not accept the basis on which the noble Lord makes his comment; namely, that the Government are breaking the law. On each asylum Bill that has come through this House, there has been the most detailed consideration on whether we were ECHR compliant. Secondly, the noble Lord knows that we are already considering the report of the UNHCR which we will again respond to. We do not accept that the procedural inadequacies are such that they put us in any way in error in terms of the legal consequences. However, we understand that these are contentious issues.

Baroness D'Souza: My Lords, is the Minister able to tell the House how many asylum seekers were deported during the past year?

Baroness Scotland of Asthal: My Lords, on removals, which I think is what the noble Baroness is referring to, the number is variable. We have increased the number of removals; it has risen by 1 per cent including dependants and 4 per cent when they are excluded. At the same time we have to bear in mind that applications fell by 17 per cent. However, it is difficult to give noble Lords a day-by-day figure because it changes all the time.

Lord Dholakia: My Lords, one aspect covered by the Amnesty report is the total lack of availability of statistical information on which we can make up our minds about what is happening in relation to asylum seekers. No data are available regarding how many asylum seekers are detained during the course of the year, for how long they are detained and at what stage of the process they are taken into detention. Does the noble Baroness agree that such data would help us in our consideration of whether detention is used solely for removal, or whether there are other underlying factors?

Baroness Scotland of Asthal: My Lords, I understand what the noble Lord is saying, but he will know that we have made real efforts to improve the statistical data produced, which is published as soon as it is available. We hope that by consideration of that data, noble Lords and indeed all those who are properly interested in this area can make the judgments and comments that the noble Lord seeks for them to be able to make.

Baroness Seccombe: My Lords, can the noble Baroness outline what proportion of police holding cells are occupied by failed asylum seekers?

Baroness Scotland of Asthal: My Lords, I do not have available the figures relating to holding cells, but I shall certainly write to the noble Baroness. At the moment, however, so far as I am aware—I emphasise that—we do not have people being held in such cells. I repeat that I shall certainly write to the noble Baroness.

The Earl of Sandwich: My Lords, can the noble Baroness confirm that the number of escapes and attempted escapes has increased? I know this to be a fact at Haslar prison and, I think, at other secure detention centres.

Baroness Scotland of Asthal: My Lords, I am afraid that I am not able to confirm for the noble Earl that there has been an increase in the number of escapes. He knows well that this issue has been a matter of concern and that strenuous efforts have been made to keep the situation properly under control. Again I am happy to write to the noble Earl, although my understanding is that what he asserts is not the case. However, I shall write to him if I am wrong.

Lord Avebury: My Lords, is there not a paradox in that the Government are planning to increase the custodial estate by 30 per cent at a time when the number of applicants for asylum is reducing sharply? Will the Government at least pay some attention to the recommendation made in the report from Amnesty International that non-custodial alternatives such as reporting restrictions should be applied?

Baroness Scotland of Asthal: My Lords, the noble Lord will know that we are reducing some of the estate. My honourable friend the Minister responsible for asylum issues has indicated that we will not carry on with the proposed development at Bicester because the population of those we need to house has dropped significantly. We are looking at these issues and making sure that the estate available is commensurate with our needs, which have now diminished.

The Countess of Mar: My Lords, I hope that the Minister will forgive me if I say that I was a little puzzled at her response to the question put by my noble friend Lady D'Souza. The Government regularly publish responses to Written Questions giving the monthly figures for removals from this country, yet she appears to be saying that those figures are not kept. Would the Minister please make the position clear?

Baroness Scotland of Asthal: My Lords, I did not say that figures are not kept, but in answer to the question put to me I said that we collect regular statistical data which are made available. I answered the question put to me by the noble Lord to show that that is the way in which those interested in this subject can scrutinise the figures and make appropriate comment. The statistics are available, but I did also say that of course they change from day to day. It is therefore difficult, as I stand at the Dispatch Box, for me to give the precise figures for today's date. However, the monthly data are available to all those who have a proper interest in this issue.

Business

Lord Grocott: My Lords, with the leave of the House, a Statement will be repeated this afternoon. It will be taken after the Second Reading of the Fraud Bill and concerns tax credits. It is to be repeated by my noble friend Lord McKenzie of Luton.

Budget (No. 2) (Northern Ireland) Order 2005

Lord Rooker: My Lords, I beg to move the first Motion standing in the name of my noble friend on the Order Paper.
	Moved, That the draft order be referred to a Grand Committee—(Lord Rooker.)

On Question, Motion agreed to.

Traffic Management (Northern Ireland) Order 2005

Lord Rooker: My Lords, I beg to move the second Motion standing in the name of my noble friend on the Order Paper.
	Moved, That the draft order be referred to a Grand Committee.—(Lord Rooker.)

On Question, Motion agreed to.

Commissioner for Older People (Wales) Bill [HL]

Lord Evans of Temple Guiting: My Lords, I beg to move the Motion standing in my name on the Order Paper.
	Moved, That it be an instruction to the Grand Committee to which the Commissioner for Older People (Wales) Bill [HL] has been committed that they consider the Bill in the following order:
	Clause 1, Schedule 1, Clauses 2 and 3, Schedule 2, Clauses 4 to 6, Schedule 3, Clauses 7 to 23.—(Lord Evans of Temple Guiting.)

On Question, Motion agreed to.

Equality Bill [HL]

Lord Falconer of Thoroton: My Lords, I beg to move the Motion standing in my name on the Order Paper.
	Moved, That it be an instruction to the Committee of the Whole House to which the Equality Bill [HL] has been committed that they consider the Bill in the following order:
	Clauses 1 and 2, Schedule 1, Clauses 3 to 33, Schedule 2, Clauses 34 to 42, Schedule 3, Clauses 43 to 89, Schedule 4, Clauses 90 to 93.—(Lord Falconer of Thoroton.)

On Question, Motion agreed to.

Fraud Bill [HL]

Lord Goldsmith: My Lords, I beg to move that this Bill be now read a second time.
	Far from being a victimless crime, fraud is an indiscriminate crime that wreaks long-term damage to UK business and, wider still, fraud hits the pockets of every member of the population. In 2000, the National Economic Research Associates estimated that fraud cost the UK economy more than £14 billion. That means that every person in the UK lost £230 because of fraud. Moreover, that figure, which has no doubt increased since then, does not reflect the part that fraud plays in facilitating other crime types. There are signs that fraud is becoming a crime of choice for organised crime and terrorist funding. Reforming the law forms part of the Government's overall strategy to combat fraud.
	The Bill has had a long gestation period, which reflects its complexity rather than its size. It deals with difficult and important issues which merit careful consideration.
	It is a peculiarity of our law that it recognises no offence of fraud as such. Instead we have statutory offences of deception, which are too precise, overlapping and outmoded to give effective coverage over the breadth of frauds committed today.
	The Fraud Bill is the culmination of a process of careful consideration. In 1998 the Home Secretary asked the Law Commission to consider the introduction of a general offence of fraud. The Law Commission's report on fraud published in 2002 concluded that the existing law could be improved in several respects.
	Over-particularisation of the offence has left the law of fraud vulnerable to technical assaults and can pose operational problems. The specific nature of the offences as they stand means that it is possible for behaviour which we would all recognise as clearly fraudulent to fall none the less outside the jurisdiction of the offences.
	One example cited by the Law Commission is the case of Preddy, where the defendants made false representations when applying for mortgages. They were charged with the offence of obtaining property by deception, which requires that they obtained property "belonging to another". But it was held that what they in fact obtained were credit balances to their accounts. These were property—they were choses in action—but they did not belong to another because they were new items which had not previously belonged to anyone at all. In fact, that particular problem has been fixed, but it is illustrative of the kind of problem that can arise in this area in the view of the Law Commission.
	A second difficulty that arises from over-particularisation of the offences is that it is not always clear which offence should be charged at the outset. Defendants have successfully argued on a number of occasions that their particular deceptive behaviour did not fit the offence with which they had been charged.
	The reliance on deception also restricts the application of the existing offences, particularly where a gain is not clearly made by that deception. So, for example, if a seller accepts a credit, a debit or a cheque guarantee card in payment for goods or services, he may have little interest—he need have very little interest—in whether or not the holder has the authority to use the card because of the nature of the guarantee which is attached to it, but the case for deception may turn on alleging a false representation being made by the presenter of the card in regard to that matter.
	There are other problems with machines and computers. For example, can a machine, which has no mind of its own, be "deceived"? The more we use machines to obtain goods and other services, the more this difficulty arises.
	The Law Commission also identified limitations in claiming that a defendant who abuses his position—this is an important issue—to make a gain or cause a loss is guilty of an offence of fraud. It can be argued that there is no deception because the defendant was in a position of trust at the time when the gain was made. Equally, a victim who is in complete ignorance of a loss after the event because information has not been disclosed may have some difficulty in proving that a deception had taken place.
	These were the kind of issues identified by the Law Commission and it proposed the changes which formed the basis of the Government's consultation paper issued last year. The reactions to that consultation showed a broad consensus and added much to the formulation of the Bill. The Government are extremely grateful to those who responded to the consultation paper. The responses were full, thoughtful and detailed.
	Key stakeholders have supported the Bill. The Fraud Advisory Panel, for example, which represents a wide range of fraud specialists, warmly welcomed the Bill, and Commissioner James Hart of the City of London Police, speaking for the Association of Chief Police Officers, said that the Fraud Bill would,
	"significantly aid the case preparation and prosecution process and accurately set fraud and economic crime in the context of other criminal activity".
	So what does the Bill do? It proposes that in England, Wales and Northern Ireland the existing eight deception offences in the Theft Acts should be replaced with a general offence of fraud. It aims to produce a clear and robust framework which is flexible enough to deal with increasingly sophisticated kinds of fraud.
	The three ways in which fraud can be committed are set out in Clauses 2 to 4. A basic requirement of all of them is that the behaviour of the defendant must be dishonest. There is a further requirement that the defendant's intention must be to make a gain or cause a loss to another. But there will no longer be any need to prove in what form he intended that gain to be realised, that a gain or loss had actually been realised, or that any victim was deceived by the defendant's behaviour. The offence carries a maximum of 10 years' imprisonment.
	The general offence can be committed in three ways: first, by false representation in any form; secondly, by failing to disclose information to another person where there is a legal duty to disclose the information; and, thirdly and lastly, by the abuse of position—that is, by taking advantage of a position where one is expected to safeguard another's financial interests.
	In addition to the general offence of fraud the Law Commission recommended a new offence of "obtaining services dishonestly" to replace the current Theft Act offence of "obtaining services by deception". That is to be found in Clause 11.
	Clause 6 represents an addition to the Law Commission proposals which was made following consultation with stakeholders. It introduces a new offence of "possessing articles for use in frauds" to replace, so far as fraud is concerned, the provision in the Theft Act 1968 which makes it an offence for a person to have with him, when not at his place of abode, any article for use in the course of any "cheat", which the Act construes as an offence of obtaining property by deception.
	The current restriction to possession of such articles outside the abode of the defendant is unhelpful in relation to modern frauds, which can easily take place, for example, from home computers. The new offence of possessing articles for use in frauds will therefore have no such restriction.
	The offence carries a maximum sentence of five years. There will be a greater sentence of 10 years for the additional offence in Clause 7 of making or supplying such articles. We have introduced that offence to tackle the people—some of whom are members of organised criminal gangs—behind sophisticated operations involving the making of such articles.
	Clause 9 follows a Law Commission recommendation from its 2002 report on multiple offending by creating an offence parallel to the fraudulent trading offence in Section 458 of the Companies Act 1985, which will cover businesses other than registered companies. This recommendation was supported by the Office of Fair Trading in its position paper on bogus trading published in 2004. This "activity" offence carries procedural and evidential advantages as it is not necessarily limited to specific transactions and there is no logic in limiting its application to companies. That offence and an offence under Section 458 will carry a maximum sentence of 10 years to match the sentence for the general offence of fraud.
	As I said, the response to the Government's consultation paper last year showed widespread support for the Bill's proposals. There were some reservations and the Government have amended the Bill to meet the main points raised. The greatest reservation—to which, no doubt, noble Lords will wish to make reference—was caused by the initial proposal to repeal the common law offence of conspiracy to defraud. In the consultation, however, many—indeed, I think the majority—argued that it would be wrong and rash to remove the offence because it provides great flexibility in dealing with a wide variety of frauds. We recognised, in the light of the consultation, that the common law offence has advantages and works well in cases involving multiple offenders and offences, where there can be hundreds of possible counts.
	A recent case of conspiracy to defraud, by way of example, involved a large number of individual victims, several banking institutions and the integrity of those banking institutions. The illicit turnover was something like £4.5 million every six weeks. It involved organised crime and international money laundering.
	The Government listened to the arguments that it is not practical, or as practical, to prosecute such cases using substantive counts or statutory conspiracy. The indictment could run to several hundred counts or several statutory conspiracies, creating a risk that the full picture would be lost in a morass of detail.
	Conspiracy to defraud allows the agreement that is the essence of the conspiracy to be reduced to one short, well drafted count that reflects the totality of the criminal enterprise. In addition, there is some conduct that can be prosecuted only as a conspiracy to defraud; for example, cases in which the defendant is ignorant of the details of the fraud and therefore may not be guilty of statutory conspiracy to commit fraud. So in the light of the points put forward, we accepted the case for retention for the mean time.
	The Government have also made changes in the light of the consultation to ensure that the offence in Clause 3 of failure to disclose information will be fraud only when a legal duty is breached. We accepted the arguments of those who said that to include other types of case, where the duty was only moral, would be stretching the criminal law too far and would intrude on the principle of caveat emptor.
	We have also removed the requirement for secrecy which initially formed part of the offence in Clause 4 of committing fraud by abuse of position. This was a particularly difficult issue because secrecy, arguably, is a hallmark of fraud. But we accepted that it would be an unnecessary complication for the prosecution and that the dishonest behaviour of the defendant and the abuse of his position with a view to make a gain, or cause a loss, should suffice to constitute the offence.
	The Fraud Bill, as presented for debate today, has been developed through an extensive review process, involving consultation and dialogue. Early on in the life of the Bill, the Government engaged stakeholders, practitioners and the judiciary to develop a Bill that is up to date and, we hope, fit for purpose. The rationalisation of offences will assist fraud investigators and improve the prosecution process as clarification of the law of fraud will weaken the scope for technical argument.
	Fraud is a common crime. In 2003, 13,881 defendants were proceeded against for the deception offences which will be repealed by the Bill. So the cumulative effect of the improvements we are bringing forward will be considerable.
	This legislative reform is only part of the Government's strategy in combating fraud. For their part, the Government have already taken a number of other measures. The Domestic Violence, Crime and Victims Act 2004 contains provisions that will enable multiple offenders to be brought to justice for the totality of their offending.

Lord Clinton-Davis: My Lords, my noble and learned friend has not yet mentioned the length of fraud trials, and I hope he will. Does anything in the Bill touch on this very important point, because jurors currently find the position insufferable?

Lord Goldsmith: My Lords, we touched on this issue in yesterday's debate on the Statement, to which my noble friend contributed. The Government intend to implement Section 43 of the Criminal Justice Act 2003, which deals with the mode of trial. I touched also on other methods of seeking to constrain the length of trials. We hope that this Bill will help too, as it simplifies the law. But my noble friend is absolutely right that the length of fraud trials is a very serious issue which we must tackle. While simplifying the law will help, the Bill will not, of itself, deal significantly with that problem. The complexity of the facts, not of the law, creates the length of trials to which my noble friend rightly refers.

Lord Ackner: My Lords, I wonder whether the noble and learned Lord could assist me. The Government's policy on the reform of criminal law on fraud is largely based on the Law Commission's report; I think he would agree with that. The commission says on page 2 of the report that the proposals,
	"should make the law more comprehensible to juries, especially in serious fraud trials. The charges which are currently employed in such trials are numerous and none of them adequately describe or encapsulate the meaning of 'fraud'. The statutory offences are too specific to offer a general description of fraud; while the common law offence of conspiracy to defraud is so wide that it offers little guidance on the difference between fraudulent and lawful conduct. Thus, at present, juries are not given a straightforward definition of fraud. If they were, and if that were the key to the indictment, it should enable them to focus more closely on whether the facts of the case fit the crime as charged".
	I take it that the noble and learned Lord agrees with those sentiments. Does not that provide, in addition to other matters raised yesterday, yet another example of the wisdom of a "wait and see" policy, rather than taking the robust measure he proposes and, without waiting to see how this works out in practice, allowing trial by judge alone in the cases to which he referred?
	Finally, on conspiracy to defraud, the Law Commission referred to the,
	"anomaly represented by the continuing survival of conspiracy to defraud, under which it may be a crime for two people to agree to do something which, in the absence of an agreement, either of them could lawfully do".
	How does the noble and learned Lord get over that comment?

Lord Goldsmith: My Lords, the answers to those questions are yes and no, and for the reasons I gave in opening this debate. Yes, it is important to simplify the law of fraud. No, it is not enough, for the reason I gave to my noble friend Lord Clinton-Davis. The facts and the evidence are complicated; the law is complicated, but that is not what causes trials to run into months and months. As to conspiracy to defraud, I have explained that as the majority of responses to the consultation were against removal of the offence of conspiracy to defraud, the Government took the view they did. I see that the noble Lord, Lord Kingsland, disagrees with me. I look forward to hearing what he has to say about it; he will put me right, as he always does.
	I have referred to the other measures that we have taken, such as the multiple offender provisions in the Domestic Violence, Crime and Victims Act 2004. Additional resources have also been provided for the Serious Fraud Office and the City of London police to tackle fraud. The creation of the Serious Organised Crime Agency will introduce a new force in tackling and defeating serious and organised crime. That will include proposals to ensure effective incentives for criminals who give evidence against their associates. That will help in fraud cases.
	As I announced yesterday—I have referred to it again today—the Government plan to invite both Houses to bring into effect Section 43 of the Criminal Justice Act 2003, allowing prosecutors to apply for trials to be conducted without a jury in very long, complex, serious fraud trials.
	The Government believe that these measures, along with the overall modernisation of the law, will help to streamline our capacity to tackle fraud and hence make an important contribution to tackling fraud and the crimes facilitated by it. I commend this Bill to the House.
	Moved, That the Bill be now read a second time.—(Lord Goldsmith.)

Baroness Anelay of St Johns: My Lords, we support the principle behind the Bill. It will be useful in simplifying and thereby, one hopes, strengthening the law on fraud. We have always made that position clear throughout our debates on the Criminal Justice Act 2003 and subsequently.
	Much can be done to improve the conviction rate of those who commit fraud, without removing the right of the citizen to jury trial in serious cases. The Attorney-General referred to the Statement that he made yesterday. We have already been reminded of that in some of the main points raised in interventions today. That is a matter of detailed debate for another day.
	In opening for the Opposition on this Bill, I should say that we have faith in the jury system, where citizens play their role in our criminal justice system in such an exemplary manner. The public, of course, have confidence in decisions made by juries.
	It is important to see the proposals in this Bill as one building block in the wall of improvements that can be made. The noble and learned Lord referred to some of the steps that the Government have already been trying to take towards improving the way in which cases may be brought effectively to a conclusion. One can look at better conditions for juries overall. The noble and learned Lord referred yesterday to practice directions. That will mean that, very shortly, if the Lord Chief Justice's directions are followed, fraud trials should not last for three months. There should be further training for judges. There should perhaps be more appropriate allocation of cases. I am aware that it is sometimes the case that a judge may have very appropriately and successfully handled a fraud case, but that he may never have had another case allocated to him in the whole of his career. Perhaps some expertise is being left to wither on the vine.
	We need research into the way in which juries function. I know that the Government have been looking at that as well. Above all, far more effective, pre-trial management of the case is needed. The issues should be sorted out more clearly. Very few cases, I understand, require people to look at balance sheets and statements; it is more a matter of issues being sorted out. It is a case of "Who did what when?" and "Was it illegal?" The noble and learned Lord shakes his head, but I am told by those who have experience in these matters that cases need to be managed and presented more clearly.
	As I have been made aware by submissions from the police and by their response to the Government, there is a need for sufficient police resources to investigate the offences in the first place. I have much sympathy with the police forces which are tasked with investigating those cases that are not referred to or taken up by the Serious Fraud Office. Police resources for fraud cases have to compete with those needed for violent crime. The Government's introduction of the Violent Crime Reduction Bill this week signals that they accept that violent crime has increased.
	I was grateful to the Norwich Union for its helpful briefing this week. In 2004, it identified and prevented 15,000 insurance frauds. Of those, it estimates that 4,000 would have met the criminal level of burden of proof, but it has to be very selective about what it refers on to the police because of police resources. So it submitted 41 fraud complaints to the police. Generally, those involved organised crime or links to other serious crime, where it believed that the evidence that it could submit to the police was overwhelmingly persuasive. Of those 41 cases, 27 were subsequently investigated by the police. Eighteen came to court and all of them resulted in convictions. Those statistics offer an interesting guide to the level of crime in the fraud field. The noble and learned Lord has very properly referred to the importance of having the resources properly to filter and get the cases to court for resolution.
	So I was intrigued to note that paragraph 3 of the Government's response to the Law Commission's report stated on the matter of police resources:
	"It—
	the Government—
	"is taking measures in partnership with local government and the private sector to bring new resources into play. We were very grateful for the offer from one respondent to provide some additional resources for the police and discussions are under way to see if a suitable project can be found".
	Will the noble and learned Lord explain what the Government are planning and what progress has been made since last November on this project? It sounds like the privatisation of some kind of investigation into selected fraud cases. How practical are those plans and what level of development have they reached?
	In the debate on the Criminal Justice Act, we gave our commitment that we would work constructively with the Government to find ways in which we could make the jury system in fraud trials work even better than it already does. We are going to support sensible reform of the law on fraud, but we will study carefully this Bill throughout all its stages to ensure that the Government's proposals reduce the opportunity for injustice being done.
	As the noble and learned Lord mentioned, fraud in the UK is indeed seriously damaging to the country, to companies and individuals alike. We are all vulnerable to the devious fraudster. Fighting fraud effectively matters. The Fraud Advisory Panel estimated in 2004 that the annual cost of fraud in the UK equated to the value of £240 for every man, woman and child. I notice that the noble and learned Lord referred to £230. I think we can forgive £10 between friends, or perhaps friends on occasions. It is a lot of money. The National Criminal Intelligence Service estimates that fraud contributes as much to UK organised crime as drug-related offences. It is a horrifying figure.
	The main focus of this Bill is the creation of a single offence of fraud, which we support and believe should make the law more comprehensible. At present, juries cannot be given a single, straightforward definition of fraud. The current statutory offences are too specific to offer a comprehensive definition, while the common law offence of conspiracy to defraud is so wide that it offers little guidance on the difference between fraudulent and lawful conduct. That observation, to which the noble and learned Lord, Lord Ackner, has referred, was made by the Law Commission.
	At present, serious fraud indictments may need to employ a number of different offences before the alleged fraudulent behaviour is fully covered, thus leading to long and potentially confusing trials. So the fraud offence in this Bill, which follows the Law Commission's recommendation, seems to be the right approach. It offers a single, comprehensive definition of criminal fraud, which can be used to make fraud indictments simpler and more self-explanatory. This should enable juries to focus on whether the facts of the case have been proved beyond reasonable doubt and to apply them to a simple, readily understandable definition of the offence.
	The second advantage that should flow from a general offence of fraud is that it would be a useful tool for the prosecution of fraud from investigation through to trial. The present clutch of specific offences can result in the wrong one being employed, either at the police station or at court, when the facts of the case actually fit a different offence. A single offence which gives a clear definition of fraudulent behaviour should help to focus investigations and ensure that the right charge is put to the right defendant.
	The third major advantage of the single offence is that it should make the law more able to adapt to the changing face of fraud as technology opens up new avenues to fraudsters to practise their crimes across cyberspace. The first limb of the single offence has the advantage of tackling the IT-borne offence of phishing, while also covering the old and detestable crime of the knocker on the doorstep, tricking people—mostly the elderly—out of their valuable possessions for a pittance.
	I look forward to examining the drafting of the new offence in Committee and to probing further the objectives and consequences of the new offences in the Bill, which seem at first blush to have much merit. The noble and learned Lord has referred to them, so I shall not cover them in detail. They comprise: the possession of articles for use in frauds or being involved in their manufacture or supply; extending to sole traders the offence of participation in fraudulent trading; and the Clause 11 offence of obtaining services dishonestly.
	One of the key recommendations of the Law Commission's report was that the Clause 11 offence of obtaining services dishonestly should sit alongside the new, general crime of fraud. A key advantage of that would be that it would circumvent the existing problem that arises under the offence of obtaining by deception in respect of automated services provision. This is perhaps a gift to Mr Rupert Murdoch, who will no doubt welcome this measure as a weapon against those who try to get access to his digital channels by using illegal decoders to avoid paying a subscription to him. I pay two subscriptions to him. I certainly would never dream of avoiding paying as a customer. I wonder, however, how heavily the investigation of such offences will fall upon police resources.
	In the light of the creation of the new single offence of fraud, it is astonishing that the Government have decided to retain the old and flawed offence of conspiracy to defraud. The Law Commission very clearly and firmly called for its repeal. The Government's own report last October noted that:
	"It is normally fundamental to a codification exercise such as this, that the common law should be repealed in favour of the new statute".
	My noble friend Lord Kingsland, who is leading for us on this Bill, will address the issue of conspiracy to defraud in detail further on. If the Government are determined to retain the conspiracy offence, surely we should at least bring it up to date to ensure that it is fit for purpose in the modern day.
	There is one line of inquiry that I would like to examine in Committee, and in a helpful spirit I give notice of it very briefly now. I refer to the exemption given to married and civil partners in Section 2(2)(a) of the Criminal Law Act 1977. The consequence of that section is that if the husband and wife, or civil partners, are the only persons who conspire together to commit a fraud, they cannot be convicted—they get away with it—because the activity is not in itself an offence. They have to conspire with somebody else before it becomes an offence.
	The rule causes real problems. If a jury is not satisfied that there was another party to the conspiracy, it has to be directed to acquit the husband and wife—or in future, of course, the civil partners. Can that really be right in the 21st century? It harks back to the days when a wife was considered the chattel of her husband, unable to exercise her own will. As I approach my own 35th wedding anniversary, I can say that I am no chattel.
	In conclusion, we shall support the proposals in this Bill if they make the law of fraud clearer and more straightforward. We believe that if we can achieve that improvement, everybody concerned in the process, whether they are jurors, police, victims, defendants or lawyers, will be better placed to understand who has committed a crime and who has not. That can only be of benefit to us all.

Lord Thomas of Gresford: My Lords, it is a pleasure to deal with legislation which has had so much considerable thought devoted to it, and a long period of gestation, as the noble and learned Lord said in his opening remarks. It has been considered by the Law Commission and the Government's respondees on consultation, and now, finally, it is being considered in the Bill before the House. It is a Bill that is clear in its terminology and intent. Whether it has all the ingredients quite right is a matter that we shall debate both today and in Committee, but the general thrust of the Bill is in the right direction. In particular, the Bill avoids a tortuous definition of fraud, establishing as it does three basic areas within which the Government hope that the generality of charges will fall.
	The Explanatory Notes on Clause 2, which deals with false representation, make a number of interesting and useful points. In the first place, the representation "must be made dishonestly", as in the leading case of R v Ghosh. The Ghosh test is referred to at length in the Law Commission's report. In replay of yesterday's argument, I remind your Lordships that that test is, first, whether the defendant's behaviour would be regarded as dishonest by the ordinary standards of reasonable and honest people and, secondly, whether the defendant was aware that his conduct would be regarded as dishonest by reasonable and honest people. So while emphasising that it is essentially ordinary and reasonable people who decide what honesty and dishonesty is, on the one hand, the Government on the other hand—ironically—propose to alter that test in certain cases so that a judge will ask himself, "Would that conduct be regarded as dishonest by me, a traveller on the Clapham omnibus as I always am?". That is a totally different sort of test from the Ghosh test.
	The representation in Clause 2 can occur in written or electronic form. We are pleased to see that the ambit of criminality has been widened quite substantially to bring the charge into line with current forms of deception and fraud. I refer, as previous speakers have, to the misused credit card. It is a good thing also that it is immaterial what the person on whom the fraud is being perpetrated thinks. The person who accepts the credit card has no idea whether it is valid; only the person presenting the card has that information. The fact that the defendant knows that he is misusing the card will be sufficient under this Bill. As the noble and learned Lord the Attorney-General pointed out, that is very important when so many commercial transactions, particularly in the consumer field, are conducted through the use of machines, in one way or the other.
	That point touches on the very serious issue of identity theft. I take this opportunity to emphasise the utmost misery that identity theft can bring on its victims. There is no real remedy at present: the banks are unable to address the issue properly, because there is no networking between the banks to ascertain names of victims whose cards or whose details have been stolen. In many cases, police officers at police stations, who may be less than sympathetic, discourage a criminal report. Most of the time a victim cannot prove with immediate ease the fact that he did not consent to what happened, or that he did not incur a specific expenditure.
	Banks sometimes issue new debit or credit cards, but that is of little consequence, as the defrauders continue to apply for additional cards—and all too often those applications are granted, without any further confirmation. Another problem with identity theft is that it can be used and furthered abroad. Again, there is no form of protection—there is nothing worse than having an identity stolen by a person getting hold of passport details. I make those comments because it seems to me that one of the excellent intentions behind the Bill is to address that sort of problem.
	The emphasis in Clauses 3 and 4 is on dishonesty and intention on the part of the defendant, and not on recklessness. That is a relief for those of us who have had to deal with the concept of recklessness over the years.
	Clause 3 deals with failing to disclose information. The wording does not follow that of the Law Commission draft, however, which used the expression "wrongfully", both in the title and in the body of the draft clause. The Law Commission also defined how "wrongfully" was to be interpreted, in paragraph (a), where there is a duty to disclose, and paragraph (b), where he knows that the other party is trusting him to disclose. I wonder what the thinking is behind the Government's decision to drop the word "wrongfully" from the position that it held in the Law Commission's draft Bill.
	By contrast, the new clause, which has come into being since consultation, as the noble and learned Lord told us, does not mention dishonesty at all. It seeks to replay Section 25 of the Theft Act 1968, on going equipped. In that Act, the wording was that:
	"A person shall be guilty of an offence if when not at his place of abode, he has with him any article for use in the course of or in connection with any burglary, theft or cheat".
	There is a presumption that if the article was in his possession, it was evidence that he had it with him for such use.
	Clause 6 introduces the concept of the defendant having an article,
	"in his possession or under his control".
	No statutory defence is suggested in the Bill that he did not know or had no reason to suspect that the article was for use in a fraud, although the Explanatory Notes suggest that knowledge that the article was for such use is an ingredient. They say:
	"A general intention to commit fraud will suffice".
	The expression,
	"in his possession or under his control",
	has caused great difficulty, certainly in firearms and drugs legislation.
	There is strict liability in both those fields. I am seeking to find out whether that is what is proposed in Clause 6. For example, in the case of Vann and Davis, in 1996, it was decided that since the clear purpose of firearms legislation was to impose a tight and effective control on the use of highly dangerous weapons, Section 5 of the Firearms Act, on its true construction, made it an offence knowingly to possess an article that was in fact a prohibited weapon, and it was not necessary for the prosecution to prove that the defendant had known that it was such a weapon. It would be no defence in firearms legislation for him to prove that he had not known and could not reasonably have been expected to have known.
	Similarly, in drugs legislation, in the case of Lambert, in 2001, the Judicial Committee was concerned whether it was an essential element of the offence of possession of a controlled drug under the Misuse of Drugs Act 1971 that the accused knows that he has a controlled drug in his possession. The noble and learned Lord, Lord Slynn of Hadley, pointed out in that case that the prosecution must prove that the accused had a bag with something in it in his custody or control, and that the something in the bag was a controlled drug, but it was not necessary for the prosecution to prove the accused knew that the thing was a controlled drug let alone a particular controlled drug.
	Those are in areas of serious crime—really serious crime where drugs and firearms are a danger. However, the wording of Section 6 is such that it seems to be added to that category of cases.
	Clause 7 does indeed introduce the concept of "knowledge" in subsection (1)(a). I invite the Minister to include in Clause 6 the words "knowledge" or "knowingly", expressly so that there can be no argument about it. It should not be enough for the prosecution merely to prove that a person has an article in his possession for use in fraud. The prosecution should prove that he knew it was for use in fraud. I think that that is a very important omission. If the omission is intentional, I should be glad to know why.
	In Clause 9, the offence is to be,
	"knowingly a party to the carrying on of a business to which the section applies",
	and the Explanatory Notes say specifically that the principles established with regard to fraudulent trading will apply. Looking at Clause 9, I have this question. One of the principles with regard to fraudulent trading is that the offence can be committed only by a person who exercises some kind of controlling or managerial function within the company. Is Clause 9 to be interpreted in the same way? If it is and the person charged must have some kind of controlling or managerial function, can we not sensibly have that on the face of the Bill?
	The common law offence of conspiracy to defraud has been maintained. The issue then arises, which I am sure others will address: what areas is the common law offence intended to cover which are not covered by the specific offences? Here we have a broad definition of fraud which is satisfactory, so why do we have to retain the common law offence? The Law Commission was concerned that the common law offence of conspiracy to defraud might cover conduct such as failing to fulfil a contractual obligation or infringing a legal right and that conspiracy to defraud at common law could impose criminal liability for what would otherwise be civil wrong or torts. At paragraph 9.4 of the report, the Law Commission said:
	"To retain conspiracy to defraud on the ground that it might occasionally prove useful in such a case would in our view be an excess of caution. Since it is not practicable to identify all such cases in advance, it would mean that we could never be in a position to abolish conspiracy to defraud . . . The advantages of abolishing it, in our view, greatly outweigh any possible advantage that might accrue from retaining it alongside the new offences which we recommend".
	I emphasise the words "greatly outweigh". What has happened in the consultation process that has reversed that standard so that it is now advantageous to maintaining what is the most vague concept? A conspiracy to defraud is the vaguest concept, and yet here we are trying to clarify matters for the benefit of a jury, or even for a judge alone, so that people can understand what the ambit of a particular offence is.
	The noble and learned Lord said that the Government's intention is to retain conspiracy to defraud at common law "for the mean time". How long is the "mean time"? If he says "for the mean time", why does he envisage that at some unknown future date it will become all right to abolish that offence? Why not do it now?
	I hope that I have indicated my general support for the Bill. I hope that I have indicated the areas where I have criticisms, and I hope there will be answers to those criticisms. I end with this. If judges are to be permitted to sit alone in fraud trials, surely it would be useful for that to be a part of the Bill. Then it would clearly ring-fence the type of case which would be tried by judge alone to fraud, and we would not have the fear which we expressed yesterday that trial by judge alone will be extended to all sorts of areas which at the moment we are not told about.

Lord Lloyd of Berwick: My Lords, it seems to me that this is one of the best Bills to have come out of the Home Office for many a long year. I did not read the Law Commission report when it was published in 2002 but I have read it since. It seems to me that it is a model of what such a report should be. It is very well researched. It is very well argued. It exposes with great clarity the many defects in the existing state of the law. Above all, it contains a draft Bill; so much so that I sometimes think that all we actually need to do is to compare the draft Bill in the Law Commission report with the Bill which is now before the House. That is all that I have done.
	That brings me to the government response to the Bill, which again is excellent. I obtained it this morning by a miracle—a miracle for me—on the Home Office website. It seems to me again a model of what a government response to such a report should be. It suggests a number of small changes: improvements in Clauses 2(2) and 3(1) and in the omission of the word "secretly" in Clause 4(1)(b), with all of which I would agree. All that is to the good.
	However, as Horace, I think, says—it is usually Horace:
	"Nihil est ab omni parte beatum".
	There is a flaw, and the flaw is the one which the noble and learned Lord the Attorney-General has already foreseen, and it is one which has been independently foreseen by three previous speakers: the failure to abolish the common law offence of conspiracy to defraud—as strongly recommended by the Law Commission.
	I say at once that I have an instinctive dislike, and I think that many judges have, of these catch-all offences such as conspiracy to defraud. Of course, as the noble and learned Lord the Attorney-General has pointed out, it makes it easier for prosecutors, but that surely is the whole danger.
	It seems to me that offences of such generality, and so amorphous as conspiracy to defraud, offend against one of the more fundamental principles of our judicial system: the principle of legal certainty. How can anyone know whether they are guilty of a conspiracy to defraud until it is too late as far as they are concerned? So I urge the Government to think again on that point.
	There is a practical argument. We now have good new offences which I greatly welcome. Surely it ought to be a working rule for the Government that for every new offence that they create they should repeal at least two old offences. Here they have a chance to repeal the old common law offence of conspiracy to defraud, and I hope that they will think again before the matter comes to Committee.
	There is a very strong recommendation in the report on that, but it is the weakest point in the Government's response. It said that there were differing views as to whether there should be a conspiracy to defraud. There was a reference to a case in the House of Lords called Hollinshead, which is not a shining example of English jurisprudence. Indeed, it underlines the danger of having an offence such as that still as part of our system. If no one else does, and I suspect others will, I will certainly wish to table an amendment in Committee to restore the views of the Law Commission on that point. I would be willing to agree to the compromise proposal, as referred to in the Government's response, that we should abolish common law conspiracy now, but perhaps not bring that part of the Bill into force until we have seen how the rest of the Bill works. That seems a sensible compromise.
	The only other point that I want to make is on the concept of dishonesty. I am glad that dishonesty has been chosen as the basis of the new offences. I am indeed glad that there has been no attempt to define dishonesty in the Bill, nor should there be. At this point, I declare an interest as the author, or at any rate the part author, of the decision in Ghosh. When Ghosh came before the court, I was being led by the Lord Chief Justice, the noble and learned Lord, Lord Lane. He takes the credit, although I may have done the work. There had been a long-running dispute as to whether the test of dishonesty is subjective or objective. There have been many conflicting decisions in the Court of Appeal, which the lawyers here will recall. In Ghosh, we decided that it was both objective and subjective. That simple approach seems to have silenced everyone from then until now. Some of the academics did not like it to begin with, but it has stood the test of time since 1982, although it has never been formally approved in the House of Lords.
	It is referred to with approval in the Law Commission report, and it is referred to in the Explanatory Notes. I hope that the noble and learned Lord the Attorney-General might say when he comes to reply that the Ghosh approach is the basis on which we are being asked to enact the Bill. I hope that is not pushing my pride of authorship too far. I certainly would not support a Bill in which the test of dishonesty was to revert to the old-fashioned objective test. I hope that the noble and learned Lord the Attorney-General will be able to say, "We are enacting this Bill on the basis that Ghosh is the law as we understand it".

Lord Brennan: My Lords, my noble and learned friend the Attorney-General can be confident of the support of his own Benches for the passage of this Bill. The lawyers here present might be excited by its detail, but at Second Reading it seems to me more important for us to consider some of the policy implications of this important legislation.
	First and foremost, it is an important exemplar of the way in which Parliament, by the use of the Law Commission, can step by step reform the criminal law of our country. That is an important task; indeed one that is vital to the proper functioning of our society. By proper legislation that encodes the criminal law we hope to—and I expect usually will—produce clarity of offence and the reasonable certainty of those involved as to how the matter will progress in the course of a criminal investigation and trial.
	I hope that this is one step and that my noble and learned friend will bring forward more legislation in the life of this Parliament implementing the Law Commission's proposals to change the criminal law, and that he will do so with the same admirable economy with which this Bill addresses the law of fraud. Whatever 100 or 200 pages it might occupy in a textbook now, to encompass it in five pages and 12 principal sections is to be described as a success, subject to its passage through Committee. As a piece of law reform, it was and is a model.
	Now to the policy considerations. The previous director of the Serious Fraud Office, now the chairwoman of the Fraud Advisory Panel, Ros White, said the following:
	"Fraud is costing the country billions each year and inflicting enormous harm on individuals and communities".
	This Bill is no lawyers' piece of art; it is a practical protection of the public billions, affecting many, many people. It therefore requires two important considerations of policy. First, it should be efficiently implemented at three stages. At the beginning, by ensuring that the investigating police officers in this country who will be tasked with applying the law will be trained to understand it; able to relate its content to the multifarious ways of modern technological crime that they all encounter; and that they will then be assisted by lawyers from the Crown Prosecution Service or the SFO as to the appropriate charges that might arise from an inquiry. Good law becomes best law when it is effective in practice.
	The second step of efficient implementation is to ensure that this Bill becomes psychologically connected in the mind of every lawyer, police officer and court with the legislation on the proceeds of crime. We prosecute crime and fraud not just to convict and punish but to recover stolen assets. I said billions, using the quotation from Ros White. The public will expect, as time goes by, a recovery that can reasonably be made from the activities of major fraudsters.
	The last point is that any Bill of this kind—momentous as it is in the life of our criminal law—will be met by legal analysis and appeals. I invite my noble and learned friend to invite the Lord Chief Justice and the Court of Appeal Criminal Division to ensure that appeals arising under the Act, when it becomes an Act, are dealt with promptly in groups according to topic or whatever, and certainly within a period of three or four months. The last thing that we want is several years of uncertainty about its proper interpretation by the courts.
	So, efficient interpretation is the first policy point. The second general policy point is that the Bill should take its place as an effective part of the framework of combating financial crime. Its terms generally deal with fraud and dishonesty, but two clauses deserve emphasis in the context of major financial crime—Clause 4, which is on the dishonest abuse of position, and Clause 12, which is about the liability of corporate officers for their company should it be found to have committed one of the crimes.
	Taking the two together in the realm of high finance, what is an abuse of position? The legal concept—technical, sound, fiduciary—is easy to understand, in that one person should show loyalty to another if it is his responsibility to protect the other's interests. In Committee, Clause 4 deserves especial attention in the context of major financial crime. That is because it goes beyond technical financial offences and the specific offence of insider trading, and produces an area of concern to the public of which the financial world should be astute—and so, I suspect, should we lawyers in applying the Bill.
	The Bill should form part of the framework of combating fraud, as I said. We have reached the stage where we have a Financial Services Authority and a Serious Fraud Office with experts assisting them, and an efficient procedure in court in the sense of trial, appeal, recovery of the proceeds of crime and so on. That framework should be used as a composite system of control. We are not talking about disparate and unrelated parts of combating fraud.
	When the Bill comes into force, I expect that those involved in chasing convictions for fraud and recovering assets will look at the framework in the following way. The Financial Services Authority will attack through fines or regulation and control the level of financial defalcation appropriate to that kind of penalty. If the Serious Fraud Office recommends that there be criminal proceedings the next stage should be, as I understand the law to be applied in future, a plea-bargaining system in which fraudsters are punished and relieved. They will be punished be being made to pay up, and relieved with the consequence of perhaps getting a lesser sentence or no sentence of imprisonment, if that fits the justice of the case.
	After that, if the plea bargain did not work and there was a trial and conviction, there would be long sentences. Ten years is the maximum. I am not recommending draconian reactions, but is that the right level at which to pitch public sentiment about very serious financial crime? The crime may involve hundreds of millions, or be a major pension fraud that damages the lives of many. In America, the test for sentence is, "How much, and how many people were affected?". Then you fix a sentence. The framework is the product of existing legislation plus the Bill, and it is one that we should start applying.
	I close by rehearsing the opening remark. The Bill is good, and will benefit from scrutiny in Committee. However, I hope that it comes into force quickly and will be followed by other similar Bills.

Lord Goodhart: My Lords, 45 years ago as a young barrister, I used to go up to Cambridge at weekends to teach undergraduates. One subject that I taught was criminal law and I had to struggle to keep ahead of my students, because I was not then—or, indeed, later—involved with criminal law as a practitioner. However, I still remember the complications of the law of fraud, as it then was, and especially of what was then called obtaining by false pretences.
	I therefore believe that the Bill represents an admirable piece of work by the Law Commission. It broadens the definition of fraud offences. In doing so, it simplifies the law and makes it more understandable to non-lawyers. It gets the balance right between a law that is too detailed so that dishonest actions are not crimes unless they fall within the precise wording of the statutory offence, and making the law too general, which creates uncertainty about what is a crime and leaves too much to interpretation by the courts.
	Many speakers have compared the Bill with the Law Commission's original draft Bill. I shall take up and enlarge on some of those points. Clause 3 is about fraud by failing to disclose information. In the Bill, that is limited to failure to disclose information that there is a legal duty to disclose. As the noble and learned Lord the Attorney-General explained, the Law Commission's Bill provided that it should also be a criminal offence to fail to disclose information where there was a relationship of trust that the defendant had abused by failing to disclose relevant information. The noble and learned Lord gave reasons of some force for not going as far as the Law Commission. He said that to do so would convert what is at present a moral obligation alone into a legal obligation, which might be a step too far.
	The standard scenario, or one of them, is that of someone who has a collection of pictures that they want to sell. The owner has a personal friend who is a dealer and says to him, "I know that I can trust you. Make me an offer for my pictures". The dealer recognises that one picture is far more valuable than the owner realises and makes an offer that ignores its true value, and that offer is accepted. That is plainly a breach of a moral obligation. Whether it should also be treated as a criminal fraud should be probed further in Committee.
	A supplementary question that follows from that was raised by the noble Lord, Lord Brennan. Is the scenario an example of an offence anyway under Clause 4? Is the dealer someone who occupies a position and, if so, is he in a position in which he is expected not to act against the financial interests of the owner of the pictures? As the noble Lord said, it is important to decide what is meant by "position", a word with which the courts are not generally familiar in this context.
	Clause 9 extends the crime of fraudulent trading to unincorporated businesses. Of course, fraudulent trading was originally an offence under the Companies Act. That was because the offence was originally meant to cover the abuse by companies of limited liability. The directors of a loss-making business with no hope of recovery continued to run the business, and pay themselves substantial salaries for doing so, until the balloon finally went up. That originally left the creditors with no personal claim against the directors and no funds in the company. That was less of a problem in unincorporated businesses, where owners faced the risk of personal bankruptcy. Therefore, are the Government satisfied that the new offence is needed? What is the evidence of existence of a problem in relation to unincorporated businesses? The clause heading refers to,
	"business carried on by sole trader etc."
	Does the "etc." mean partnerships? I assume that it does, but can that be confirmed?
	I turn to the point that has been strongly made by the noble Baroness, Lady Anelay, my noble friend Lord Thomas of Gresford and by the noble and learned Lord, Lord Lloyd of Berwick, regarding the recommendation by the Law Commission of the abolition of the common law offence of conspiracy to defraud and the rejection of that recommendation by the Government. Conspiracy to defraud is a strange offence. People can be charged and convicted of conspiracy to defraud, even when the contemplated action would not have been an offence if it had been carried out by one person on their own. The Law Commission makes a strong case for abolition of the common law offence.
	The new provisions in the Bill will be broad enough to catch some conduct which previously could be prosecuted only as a conspiracy to defraud. But where such conduct is not caught by the new provisions, it probably does not deserve to be treated as a crime. The common law offence should either be repealed, or, at least, restricted by excluding cases where the acts envisaged by the members of the conspiracy would not in themselves be offences. To say that the common law offence of conspiracy to defraud must be retained because otherwise multiple counts would be needed in fraud prosecutions would have the tail of procedure wagging the dog of substantive law. That is the wrong way round.
	I shall finish by repeating that, overall, the Bill is a fine example of the value of the Law Commission and a tribute to its creator, Lord Gardiner.

Lord Kingsland: My Lords, I join all noble Lords who have complimented the Law Commission on its remarkable report and, particularly, on the proposed Bill that they published at the end of it. We, as my noble friend Lady Anelay has said, support this Bill and congratulate the Government on bringing it forward.
	However, it contains one major flaw; that is, the continuation of the offence of conspiracy to defraud. The noble and learned Lord the Attorney-General said, in his opening speech, that if he got something wrong, he knew that I would put it right. Fortunately, I rarely have to utilise that corrective mechanism; and it may be that on this occasion I shall be in error in attempting to do so.
	However, the noble and learned Lord did indicate that a majority of those who were consulted supported the continuation of the offence of conspiracy to defraud. But that conflicts with the information that I received from his department. I may have misread or misunderstood the information, but my belief is that Liberty, the Criminal Law Solicitors' Association, the Institute of Counter Fraud Specialists, the International Underwriting Association, the London Criminal Court Solicitors Association, HM Customs and Excise, the Audit Commission and the Institute of Legal Executives all supported the abolition of the offence of conspiracy to defraud.
	The two main supporters of its continuation were, not surprisingly, the CPS and the Serious Fraud Office. One would expect those organisations to want the continuation of that offence. It makes writing indictments much easier. But it is astonishing that the Government have given in so easily to these pressure groups. One of the main themes of the Government's support for the Bill is that they produced a new comprehensive definition of fraud. At no stage during the opening speech of the noble and learned Lord the Attorney-General did he indicate any chink in the armour of that new definition. Nor is there any indication of such a gap in the Law Commission's report. Indeed, were there to be such a gap, I am sure that the noble and learned Lord would have sent both the Bill and the report back to the Law Commission and asked it to redefine the general offence.
	It is sad, after all the work done by the Law Commission, that the Government have not had sufficient confidence in the intellectual quality of its work to back its conclusions. The result will be exactly what the noble and learned Lord, Lord Mayhew, said recently in a different context. The disease of overloaded indictments that confuse both juries and defendants—and sometimes the prosecution, too, to say nothing of the judge—will continue due to this unnecessary and confusing retention.
	It is important that the case that the Law Commission makes for abolishing the conspiracy to defraud offence is well understood. The Law Commission describes conspiracy to defraud as one of the two principle defects of the current law. The concept of fraud, encapsulated in the definition of conspiracy to defraud, is wider than the range of conduct caught by any of the individual statutory offences involving dishonest behaviour. This means that it can be criminal for two people to agree to do something which it would not be unlawful for one person to do.
	The Law Commission concluded that conspiracy to defraud was far too wide in its scope,
	"in that it catches agreements to do things which are rightly not criminal".
	Its report states that the cases on the meaning of "to defraud" have given it an extensive meaning, so that any dishonest agreement to make a gain at another person's expense could form the basis of a conspiracy to defraud. The Law Commission states,
	"we take the view that this definition is too broad".
	That is because we live in a capitalist society which, by its nature, revolves around the pursuit of gain at the expense of competitors. Such behaviour is perfectly legitimate; it is only the element of dishonesty that renders it a criminal fraud. In other words, dishonesty, as the noble Lord, Lord Thomas of Gresford, reminded us, does all the work in assessing whether particular facts fall within the definition of the crime.
	Moreover, there is no statutory definition of dishonesty. The case of Ghosh, in which the noble and learned Lord, Lord Lloyd, participated so memorably, provides that the jury must be satisfied both that the defendant's conduct was dishonest according to the ordinary standards of reasonable and honest people; and that the defendant must have realised that it was dishonest according to those standards. Therefore, activities that might otherwise be legitimate can become fraudulent if a jury is prepared to characterise them as dishonest. That delegates to the jury the responsibility for defining what conduct is to be regarded as fraudulent; and it leaves prosecutors with an excessively broad discretion when they are deciding whether to pursue a conspiracy to defraud case.
	The Government's consultation document stated that the common law crime of conspiracy to defraud was defined "very broadly" and that as the,
	"element of dishonesty is left to do all the work",
	this left,
	"the range of the offence . . . unfairly uncertain and wide enough potentially to encompass sharp business practice".
	In their consultation document, the Government propose to repeal that law and replace it with a general offence of fraud, which would,
	"benefit juries by making fraud law easier to understand".
	But as a result of the objections of the CPS and the Serious Fraud Office, the Government have simply caved in and agreed to keep the offence of conspiracy.
	In paragraph 5.28 of the Law Commission's report we have, in my submission, the complete answer to the Government. The Law Commission states:
	"We continue to believe that a general dishonesty offence, by not requiring as an element some identifiable morally dubious conduct to which the test of dishonesty may be applied, would fail to provide any meaningful guidance on the scope of the criminal law and the conduct which may be lawfully pursued. We do not accept the argument that inherent uncertainty is satisfactorily cured by the promise of prosecutorial discretion. This cannot make a vague offence clear and, while it might ameliorate some of the risks, it does not excuse a law reform agency from formulating a justifiable and properly defined offence. We do not believe it is for the police and prosecutors to decide the ambit of the criminal law. As the Supreme Court of the United States has said: 'A statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process of law'.".
	I believe that that paragraph is unanswerable. I invite the Government to think again about their decision to include conspiracy to defraud on the face of the Bill. If they continue to persist in doing so, they can be certain to meet amendments from the Opposition in the course of the passage of the Bill.

Lord Goldsmith: My Lords, I welcome the support given by all noble Lords who have spoken to the Bill. I share with noble Lords the congratulations that they offer to the Law Commission. The value of the work carried out by the Law Commission is often undervalued. It is outstanding. We do not always accept everything it says and we do not always move to legislate for what it puts forward, but I am very glad that in this House we agree that this is a fine example and one that we are proud to put forward.
	I also agree with much of what noble Lords said about the policy behind the Bill. I agree wholeheartedly with much of what the noble Baroness, Lady Anelay, said and I am very happy, at least for these purposes, to be counted as a friend. Whether the figure is £230 or £240 per head, it is an enormous sum of money that the country is losing as a result of fraud. As I said in opening, that is why it is important that we act in a number of different ways to protect the country and the economy better against fraud. In that respect my noble friend Lord Brennan made some very important observations about fraud. What he said deserves close attention in the wider debate and consideration of fraud.
	I turn to some specific points raised by noble Lords. The noble Baroness, Lady Anelay, mentioned a reference in the Government's response to the consultation paper to resources to deal with fraud. As the paper says, the Government were grateful for a particular offer that was made. I understand that that project is still under discussion. I see no reason why I should not identify by whom it was made: the Finance and Leasing Association. That association is having discussions with the City of London Police. Although that is welcome, it will be a relatively small project and not a major plank of our effort.
	Other matters are happening in relation to the resourcing. Overall resourcing for policing has increased. Expenditure on policing supported by government grant or central expenditure on policing has increased by 39 per cent—more than £3 billion since 2000–01. In the context of fraud, I refer to additional resources that have been provided by the Home Office and the Corporation of London, I am glad to say. I was instrumental in negotiating that for work by the City of London fraud squad, together with the Serious Fraud Office.
	I accept that there is an issue about the resources that have been applied to the investigation of fraud. There are a number of reasons why much fraud is not prosecuted. The noble Baroness, Lady Anelay, referred to such an instance and I believe that further attention needs to be given to such issues.
	The noble Baroness also raised a point about Section 2(2) of the Criminal Law Act 1977. I do not believe that any noble Lord would dare regard the noble Baroness as a chattel or anything close to it. She need not have denied that. Reform of the 1977 Act is not an issue for the Fraud Bill, but—this is relevant to the other big debate that we have had this afternoon—the Law Commission is looking at the law of conspiracy more generally, as part of its codification project. It hopes to issue a consultation paper early next year. At the very least I shall ensure that the point made by the noble Baroness is fed into that consideration. I believe I am right in saying that that is an issue that is already in mind, but I shall need to confirm it. The noble Baroness may still wish to pursue the matter in Committee, as she is entitled to do.
	The noble Lord, Lord Thomas of Gresford, made an important point about the misery of identity fraud. He is absolutely right that identity fraud is an increasing and very serious problem. Therefore, he is right to say that it is important that the law is able to deal with the matter by having offences that adequately cover the circumstances.
	The noble Lord may not be surprised to hear me say from these Benches that dealing with identity fraud after the event is not the only answer. Preventing identity fraud is very important too. In relation to another Bill, which I shall not be presenting to the House—other colleagues will do that—a reliable form of identification will be under consideration. I say no more about that today, but I thought it opportune to make that observation.
	The noble Lord, Lord Thomas, raised important and relevant points about a number of the clauses. We shall refer to them in Committee, but he and the noble Lord, Lord Goodhart, raised a question on Clause 3. The reason for dropping the word "wrongfully" is precisely the reason given by the noble Lord, Lord Goodhart: that the Government accepted in the consultation that they should narrow the offence so that it was restricted to a case where there was a breach of a legal duty. The consequence of that was that the word "wrongful", which was then interpreted to include other things, was not needed. I understand why the noble Lord, Lord Goodhart, wants to consider further whether the Government have gone too far in narrowing the offence. That may be a matter to which we shall return.
	On Clause 6, the noble Lord, Lord Goodhart, asked whether it was an offence of strict liability. I believe the answer is no. It is not the intention for Clause 6 to create a strict liability offence, as he said the Explanatory Notes say. The answer to his question may well lie in the fact that the particular words are followed by the words "for use". No doubt that is a matter to which we can return.
	The noble Lord also asked in relation to Clause 9 about who would be caught by the offence. It is intended that the existing case law on fraudulent trading under the Companies Act will apply to the fraudulent trading offence in Clause 9. Those include a requirement that the defendant has taken some positive steps in the carrying on of the company's business and that he exercises some kind of controlling or managerial function. The noble Lord may wish to return to that.
	On the same clause, the noble Lord, Lord Goodhart, asked what is meant by "sole trader etc.". I am sure he is right to say that it applies to any business and would include partnerships because it applies to any business not covered by the Companies Act 1985, which would include, not only sole traders, but also partnerships and trusts as well.
	The noble and learned Lord, Lord Lloyd, in welcoming the Bill, asked me to confirm that the Ghosh test will apply to dishonesty. He rightly noted that the test has had wide support and has been followed—although, as he rightly said, not yet by the Judicial Committee of this House. I can say that that is the current definition of dishonesty; it is referred to in the Explanatory Notes; no other definition is offered in the Bill. I cannot preclude your Lordships from in due course taking a different view and saying that Ghosh was wrong all along, but I have no reason to think that it is. That is the most assurance that I can give to the noble and learned Lord.
	My noble friend Lord Brennan, as well as making his observations on policy and implementation issues, which, as I said, were very important and worth noting, asked that we draw to the attention of the Lord Chief Justice the desirability, if there are appeals once the Bill is in force, that they should be dealt with swiftly so that uncertainty in the law is swiftly brought to an end. I am sure that he is right that that is important. It will be for the Lord Chief Justice to determine when and how to do that. If I may presume to say so, I should have thought that that suggestion will be treated as important and correct. My noble friend also asked about sentences for fraud. That is also an observation for the courts to consider.
	I have already attempted to deal with the specific points on clauses raised by the noble Lord, Lord Goodhart. He also made observations that it is important for us to take into account and have regard to.
	I turn to the issue raised by all noble Lords who spoke, which I had predicted would be a topic on which we would have discussion. I would not want to be so much of a spoilsport as to try to deal with all those important points today. I and the Government have been absolutely open about this. The Government saw the force of the points made in the Law Commission's report. We put the matter out for consultation and received the responses set out.
	There is a point—perhaps of detail, perhaps not—between me and the noble Lord, Lord Kingsland. I rely on what the Government said in their response and draw to his attention paragraphs 39 and 40, which state, first in paragraph 39:
	"The repeal of Common Law Conspiracy to Defraud was the only proposal to which there was widespread opposition".
	Paragraph 40 goes on to say that,
	"repeal was opposed by the majority of consultees",
	which is also the information that I have received directly. I have not counted them myself; I do not know where the noble Lord's information comes from; but we will obviously look into the matter. That is for a future date.
	I must say, however, that I—I do not take exception; I never take exception to what the noble Lord says—differ from the noble Lord when he described the Crown Prosecution Service and the Serious Fraud Office as pressure groups. They are in fact bodies charged with the duty of prosecuting in the interests of the public. If they have views on whether putting the law in one way or another will ease or make more difficult the prosecution of crime in this country, those are views to which we must pay full and proper attention.
	There are two issues, perhaps three, that we will need to consider when we return to the matter of conspiracy to defraud. The first is the practical value of the offence. We will need to explore that in more detail than is appropriate today, but I mentioned that in my opening speech.
	The second is whether there is conduct that would be caught by conspiracy to defraud that would not be caught by present offences. The noble and learned Lord referred to a decision in Hollinshead. That was an example where the conduct involved was a number of people conspiring to manufacture devices that were then used to help people avoid paying for electricity. It was held by the courts that they—that is to say, the manufacturers—could not be found guilty of conspiracy to commit the offence of obtaining the electricity by use of those devices because they were not involved in the actual abstraction of electricity. I do not comment on whether the noble and learned Lord is right to say that the decision was a bad one, but it illustrates the problem that people may be involved in conspiring to do something but not in the substantive offence because that is done by a third party who is outside the conspiracy. That is one aspect that we will need to consider.
	My third point, on which I have already touched, is that the Law Commission is publishing a report on participation in crime.

Lord Goodhart: My Lords, I am grateful to the noble and learned Lord for giving way. Would not the Hollinshead example of something manufactured with a view to being used by other people to abstract electricity now be covered by Clause 7, so that that problem would no longer arise?

Lord Goldsmith: My Lords, I am absolutely conscious of that. The question, which we will want to debate when we return to this topic, will be whether that is an adequate response in the circumstances where that is the only aspect on which one would be proceeding against those people. That creates difficulties, because we would not necessarily then be able to include in the same proceedings the people who were abstracting the electricity—the severing of indictments and issues of that sort. But I do not want to go further than that; I just want to indicate the sort of areas that we will need to consider.
	The point that I wanted to make was that the Law Commission is publishing a report on participation in crime and any reform of the law that flows from that work would inform this area of law as well. Secondly, we do not yet know how effectively the provisions on multiple offending in the Domestic Violence, Crime and Victims Act 2004 will work. Obviously, we hope that they will work. If they are in force, I am not aware that they have yet been operated in any case. Thirdly, in congratulating the Law Commission, noble Lords have assumed that it must have got it right: that these offences cover everything. Again, we do not yet know that that optimism will turn out to be correct.

Lord Lloyd of Berwick: My Lords, with respect, how will we ever know that? The answer is that we cannot. That is one point made by the commission. Now is the time to do it. If necessary, we could postpone bringing the abolition or repeal into force, but please let us do it now.

Lord Goldsmith: My Lords, the difficulty is that we are dealing with an offence—conspiracy to defraud—that is at present quite regularly indicted. Therefore, the question that we must ask ourselves as we legislate responsibly, as I know we will, is whether we can be sufficiently confident that we will not be leaving outside the area of conduct that ought to be prosecuted in the public interest conduct of that sort.
	I will come back to this, but we can take the view that it is unnecessary to abolish conspiracy to defraud now in the Bill. We can look to see how the Act operates in practice; we can look to see what the Law Commission has to say about the law of conspiracy and participation more generally; and we can look to see how the multiple offending provisions operate. We can always return to it in future if it appears clear that it is no longer necessary. I know that noble Lords will wish to return to the issue.
	I welcome the support for the Bill and look forward to the discussion that we will have. To any noble Lord who would find it helpful, I offer at all stages, before Committee and thereafter, the opportunity informally to discuss these matters or to receive any further information. I will announce an open meeting to provide further information before the Committee stage so that all can participate. In commending the Bill to the House, I invite noble Lords to accept that it should have a Second Reading.
	On Question, Bill read a second time.

Tax Credits

Lord McKenzie of Luton: My Lords, with the leave of the House, I shall repeat a Statement made by my right honourable friend the Paymaster General in another place:
	"With permission, Mr Speaker, I want to make a Statement on the reforms that we have made and are making in the operation of the tax credit system, and to answer point by point the reports from the Parliamentary Ombudsman and the Citizens Advice Bureaux, published today, which deal mainly with the operation of the system in its first year of introduction.
	"Last month, on 26 May, I announced to this House a series of measures to build upon the reforms that we have already made to the tax credit system. Those included measures to streamline procedures for recipients to inform the HMRC of changes in their income during the year and measures to simplify the information provided to families in award notices. I also announced a review so that we could make changes in the procedures for dealing with disputed awards.
	"We are improving the helpline so that families receiving tax credits can have all their queries dealt with in one go and all their changes processed with one call to the helpline. I have asked HMRC where there is a dispute to consider suspending recovery of excess payments until the dispute is resolved, and where there is hardship I have asked them to ensure that additional payments are made. In other words, I have already taken measures to act upon each of the major administrative issues raised by the Parliamentary Ombudsman and the Citizens Advice Bureaux.
	"Two weeks ago, when we held a debate in the House on those issues, I offered to, and have agreed to, meet a group of MPs to discuss the issues in detail. I have written to the ombudsman and the Citizens Advice Bureaux today about the changes that we have already made, offering to meet them to discuss the detail of the reforms now being introduced.
	"I come to the issues of policy. As the report of the Citizens Advice Bureaux states, tax credits are the best way to deal with society's responsibility to help with the costs of bringing up children and tackling child poverty. The background to both the introduction of tax credits and the reports out today is that more people than ever before are receiving tax credits to help with the costs of bringing up their children.
	"In total, more than 6 million families—around 20 million people, including 10 million children—benefit from tax credits. Four in 10 families pay no net tax as a result of tax credits. The take-up in the first year exceeds 80 per cent, so in each of our constituencies nearly 10,000 families on average benefit.
	"As a result of an economy where people move between jobs more often and their circumstances change more quickly, the challenge is to adjust child tax credits to changing income patterns as quickly as possible. In fact, 3 million people now change jobs every year and often their income changes substantially.
	"Seven hundred thousand children are born every year and receive different rates of child tax credit according to their family's circumstances.
	"The fast-changing nature of the economy is such that around 300,000 receiving tax credits experience very large changes in their family income of more than £10,000 during one year.
	"In introducing the child tax credit, the big change that we made was to move from a fixed payment based on past income not on actual income, which was recognised to be unresponsive to families' changing circumstances and therefore unfair. When the new system was introduced we decided that during the course of a year we would be prepared to adjust tax credits to changes in family circumstances.
	"So the issue for the Government and all parties wishing to comment on those issues, in this House and beyond, is whether we return to a fixed system, which is clearly unfair and does not adjust for changes in family income during the year, whether we operate a system where we compensate people where their income falls but do not adjust credits downwards when their income rises, even when it rises substantially by £10,000 a year, or whether we retain the principle of getting the balance right between taxpayers and the individual family.
	"I am happy to listen to the views of all parties on those issues now, but I must tell the House that when we consulted widely before the implementation of the tax credit, the overwhelming consensus was that to balance the needs of the taxpayer and those of the family claiming, the system should adjust to any drop in income and therefore compensate the claimant in full, and respond to an increased family income during the course of the year only when the family's income increased by £2,000 or more.
	"I also have to tell the House that when these issues were voted on in the House there was a clear majority in favour of the proposals that we put forward.
	"I will continue to keep the House fully updated on developments within the tax credit system, as I have endeavoured to do in debates and Statements in the past.
	"The ombudsman, in her report, makes reference to a small part of one sentence of one Written Answer and suggests that it offers an incomplete picture. Repeatedly I have answered questions on the issue. Indeed, in a debate on 26 January, I told the House that there had been problems going back to the introduction of the computer system. More recently, I issued a Statement on 26 May setting out the situation, the action that has been taken and what more we will do to improve the system. There was an Adjournment debate on 7 June at which I responded to many of the issues raised by honourable Members.
	"I will, of course, keep the House updated on the reforms that we are putting in place to improve the system, and report back on my discussions with voluntary and community organisations".
	My Lords, that concludes the Statement.

Baroness Noakes: My Lords, I thank the Minister for repeating the Statement made in another place. Let me state for the record, since it was absent from the Minister's Statement, that for 2003–04 nearly 1.9 million families were overpaid amounts totalling £1.9 billion and more than 800,000 families were underpaid by nearly £500 million. That is an error rate of 46 per cent.
	The cases cited in the reports of the CAB and the ombudsman are truly dreadful. Families had to be rescued with Salvation Army food parcels because forced repayments left them destitute. At the end of May, the Paymaster General announced a six-point action plan, but it was full of administrative procedures and reviews and gave no indication of how long it would take to bring about real change. It was a bureaucrat's response; it was not about relieving human misery or distress. What will the Government do now about the people whose lives they have already damaged by repayment demands, including those who have already been forced to repay at huge personal cost?
	It is all very well for the Government to say, as the Minister said two weeks ago, that nearly £1 billion of the overpayment resulted from increases in family income of £10,000 or more, as if that somehow excused the Government from responsibility. People who qualify for tax credits are not rich. They may well have made a mistake or failed to spot an Inland Revenue mistake in dealing with their income changes but they will almost certainly have spent the tax credits and will face hardship when any overpayment is demanded. As today's Statement revealed, 300,000 families are in that category. Will the Government do anything at all for that group of victims in the system?
	One of the big lessons is that the tax credit scheme is just too complicated. The ombudsman asked, at paragraph 1.20 of her report, in typically understated language,
	"whether the degree of financial uncertainty built into the design of tax credits can ever truly work for families on modest means".
	Let me put it more plainly: the system is just too damned complicated for ordinary people. Do the Government recognise that complexity is the worm at the heart of the system? Will they now carry out a root-and-branch review of the tax credit system?
	It is expected that, later this year, Her Majesty's Revenue and Customs will take on a further 800,000 families transferred from Jobcentre Plus. What action will the Government take before deciding whether it is safe to let those particularly vulnerable people be exposed? What monitoring systems will they put in place to ensure that, if any problems occur, they are dealt with rapidly and sensitively? Will the Minister assure the House that none of those families will be allowed to suffer in the same way as the 1.9 million families tormented to date?
	The ombudsman made 12 recommendations in her report. How many of them do the Government accept? When will they be implemented? If any of the recommendations are not to be accepted, will the Minister say clearly why not?
	In the private sector, the introduction of a critical system that generated a 46 per cent error rate would result in heads rolling. Will the Minister say what action has been taken against the individuals who had responsibility for the introduction of the tax credit system? I hope that he can assure the House that those individuals no longer hold positions of authority in HM Revenue and Customs.
	There were yet more IT failures in this case. I understand that the IT partner for HMRC was EDS. In the past few days, we have been treated to the unedifying sight of the Inland Revenue attempting to negotiate an out-of-court settlement with EDS through the medium of the newspapers. Leaving aside the question of whether that was a wise way in which to negotiate, I ask the Minister to tell us what outcome has been reached with EDS. How much of the £1.9 billion overpaid does HMRC expect to get back from EDS?
	Only two weeks ago, the Minister answered my Starred Question on the tax credit system. I asked him then whether he would apologise for the fact that 1.9 million hard-working families had been caught up in the overpayment mess. He refused to do so. The Paymaster General has also never apologised. If there is one aspect of this miserable affair that leaves a nasty taste, it is that. I ask the Minister one more time to apologise to the 2.7 million families whose lives have been affected—severely, in many cases—by the Government's incompetence.

Lord Oakeshott of Seagrove Bay: My Lords, I too thank the noble Lord for repeating the Statement made in another place. As this is the first time that I have faced the noble Lord on the Front Bench, I welcome him and wish him well in his new role. The noble Lord, Lord McIntosh of Haringey, was, quite simply, a Stakhanovite, and he will be a hard act to follow.
	The faces on the Government Front Bench may change, but, not for the first time, they are here trying to defend the indefensible in the face of the devastating criticisms of the failure of the tax credit system by the Parliamentary Ombudsman and the Citizens Advice Bureaux. Has the Minister read the chilling examples given by the CAB? I was most struck by the example of the lone parent who called at a CAB one Friday after her weekly child credit payments had been stopped without warning. She had £2 to get home and buy food for her two children and herself. I read of another lone parent who had had no tax credit payments for a few weeks; the CAB had to give her a food parcel from the Salvation Army to feed her children, as she had spent her last money on gas and electricity meters and baby foods. That happened in the fourth richest country in the world, while Gordon Brown holds us up to the rest of Europe as a shining example of a productive economy and inclusive society. Can we for one moment imagine Sweden, Holland or even France treating their vulnerable citizens like that?
	I turn to the detailed criticisms. Do the Government accept the call in the ombudsman's report for much improved communication and easier and quicker customer complaint handling? Do they accept that the Inland Revenue's assurances given to the ombudsman a year ago were over-optimistic? Do they accept the ombudsman's view that cases considered by the office represent the tip of an iceberg? Do they accept the ombudsman's suggestion that, whenever a revenue mistake or error that has led to too much tax credit being paid is identified, the customer should be immediately notified of exactly what has happened and informed of the circumstances in which recovery can be waived?
	Do the Government accept the most important practical recommendation in the ombudsman's report—it is mirrored to some extent in the CAB report, although it does not go quite so far—which is that consideration should be given to writing off all excess payment and overpayment caused by official error in 2003 and 2004? We are talking about unacceptable levels of official error. The Office for National Statistics recently reported that, of £13.5 billion paid out last year, £1.9 billion consisted of overpayments. The noble Lord heard the noble Baroness, Lady Noakes, say that, in a private business, heads would roll. Speaking from personal financial experience of running a business, I take the view that any business with such a payment system would have gone bust years ago.
	My final question is probably the most significant from the point of view of the health of the public finances and of getting Britain's system working properly as a whole. Can the Minister confirm that the contractor responsible for the serious problems with the computer system was EDS? Can he assure us that it will not be allowed anywhere near the Identity Cards Bill that the Government are trying to force through, the Second Reading of which in the House of Commons takes place next week? I look forward to hearing the Minister's answers.

Lord McKenzie of Luton: My Lords, I thank the noble Baroness, Lady Noakes, and the noble Lord, Lord Oakeshott of Seagrove Bay, for their input. I shall start by putting the matter in context. There was a lot of criticism in the reports, and it has been repeated from the Benches opposite and in another place. However, the tax credit system introduced by the Government has had a profound and beneficial impact on the lives of many families, helping to lift their children out of poverty, making work pay and supporting families. We ought to hear a little more about that, alongside the criticism.
	The noble Baroness, Lady Noakes, raised several points, and I shall try to deal with each of them. Should we apologise? Absolutely not; we have nothing to apologise for about the tax credit system. It has had a profound impact on the lives of many. There are challenges in its introduction; those have been recognised, and steps are already being taken to address them.

Baroness Noakes: My Lords, could the Minister say what the error rate would have to be, before the Government would apologise?

Lord McKenzie of Luton: My Lords, I shall deal with the point about the error rate. The statistic that is quoted is misleading. The suggestion that overpayments are inevitably an error is a misunderstanding of what is happening in the system. It is a responsive system, which means that, if the income of a family goes up during the year by more than £2,500, there is the prospect of an overpayment. That is a consequence of the way in which the system works; it is not, in those terms, an error. The issue is how we encourage people to report changes more effectively, so that those changes can be reflected more quickly in the payments that they get. We need to see that in context.
	A fundamental issue is the assertion that is made about financial instability. It goes to the heart of the way in which tax credits are constructed. It was debated extensively in another place, and the majority there was very clear about what it wanted. The CAB, which was consulted at the time, wanted a system that was responsive and flexible and took account of changes for families during the year. I ask those on the Conservative and Liberal Democrat Benches whether they want to pull all that back and go for an inflexible, fixed, flat system that is not fair to families and does not adjust to reflect family circumstances during the year.
	A question was asked about the 800,000 families that are due to be transferred into the system. As my right honourable friend in another place explained a short while ago, the plan is still to transfer them into the system by the end of the year. We will monitor the system continuously this year to make sure that the transfer can be done safely and will report to the other place if there are any changes in the plan. I am happy to make the same assurance to your Lordships' House.
	The issue of hardship was raised. Of course there is sympathy for families that end up having to deal with repayments. But in the code of conduct and procedures of HMRC there are processes to protect people. Those need to be reviewed, and that is one of the undertakings given by my right honourable friend. HMRC paid out £170 million in 2003–04 to mitigate hardship.
	On the issue of whether the system is too complicated, in its first year of operation—2003–04—the take-up of child tax credit was about 80 per cent, which is better than the take-up on family tax credit. As I said earlier, 6 million families are benefiting. That seems to me to show an understanding of the system.
	On the ability of people to spot overpayments, they do not have to understand how the system technically works. The key to it is the data that are provided when the award is made; that is, the size of the family and the family income. Those items should be easy to spot. Nevertheless, one of the undertakings given by the Paymaster General is to review award notices to see whether they can be improved to help communication. Indeed, the noble Lord, Lord Oakeshott, asked whether we accept the issue about increased and better communication. The answer to that is "Yes". It was dealt with in the Statement made on 26 May. That must be carried through.
	On the issue of over-optimistic assurances, it may well be the case that they were over-optimistic. But as a greater understanding of how things are working in practice has developed, the Government have looked at the issue speedily and have responded.
	On the issue of whether heads will roll for this, the politicians involved have fully accounted for themselves in another place as the matter has developed. What happens to employees of HMRC is an internal matter for that department.
	All of the administrative issues raised in the ombudsman's 12 recommendations had already been covered in the Statement of 26 May, and they are being tackled. There were recommendations in respect of writing off overpayments caused by official error. They will be written off if they are the result of official error, as long as it is reasonable for the claimant to believe the payments to be accurate and appropriate.
	The recommendation to set in-year recovery rates at the same level as those for previous years is not accepted. This is part of the balance of how we deal with recoveries of genuine overpayments. The problem is that if recovery rates are limited in-year they are stacked up in subsequent years, and life is no easier down the track.
	The issue of suspension of over-payments in official error cases has been taken up. It has been announced that when there is a dispute the process of recovery will be suspended until it has been resolved.
	I think that covers pretty much all of the recommendations that were made. Crucially, most of the issues raised in the recommendations were already being dealt with as a result of the Statement of 26 May.
	Other questions were asked. I cannot reasonably comment on the matter of the contractor, EDS, and the Identity Card Bill, and I am not sure that the noble Lord would expect me to do so. I cannot give the House an answer about the outcome of the discussions with our former IT partner, but I shall see that noble Lords are written to on that subject so that they can be sure about what is happening.

Lord Oakeshott of Seagrove Bay: My Lords, can the Minister tell the House the name of the former IT partner?

Lord McKenzie of Luton: My Lords, the noble Baroness, Lady Noakes, referred to EDS and I can confirm that it was the former IT partner.

Lord Oakeshott of Seagrove Bay: My Lords, can the Minister tell the House the name of the current IT partner?

Lord McKenzie of Luton: My Lords, I shall give you an answer to that question shortly. It is Cap Gemini.
	I have already dealt with the question of writing off in cases of official error. It will be done if the claimant reasonably believed that the payment was appropriate.
	We accept the issue about communicating errors and mistakes to claimants. That is being dealt with as part of trying to improve the nature of communications so that people are more fairly alerted.
	I believe that I have covered all the points raised, except for the matter of negotiations with EDS, about which I shall write to noble Lords, but doubtless noble Lords will prompt me if I have not.

Lord Barnett: My Lords, I declare a past interest as I made a modest living from complex tax systems and an even more modest living from introducing them as Chief Secretary to the Treasury.
	These are two serious reports. I know that my noble friend will not have underestimated the serious criticisms within them. I understand from what has been said that the Treasury and the Inland Revenue—although we must now refer to it in a different way as HMRC—are looking into these major problems. But if able and successful businessmen found the tax system very complex, even when they were advised so well by professionals, how difficult must millions of the very lowest paid people who have no benefits advice at all find it?
	It is not surprising that the computer system could not cope with the system. Indeed, I have problems with just one computer, so I understand that there were problems there. On the other hand, reading these reports, if one is not careful one can lose track of the objective, which is to help the lowest paid people in the land. In fairness, I am bound to say that I have not heard any alternative proposal from the noble Baroness, Lady Noakes, or the noble Lord, Lord Oakeshott, that would help the lowest paid in the land.
	Some of the lowest paid are clearly not benefiting from the system. They are not only not benefiting but are suffering from the way that it is operated. We must recognise that. I know from what the Minister has said, and from what my right honourable friend in another place said, that the Government recognise the difficulties that have arisen. I am pleased to hear that the Treasury has agreed and the Paymaster General has instructed the Revenue to suspend the reduction of income where there is a dispute. It is not enough just to do that in the case of a dispute. Many of the people we are talking about do not even know that there is a dispute. It needs to be more carefully handled.
	I know that there is a helpline, but most of these people do not know how to press buttons one, two, three and four, which you are usually told to do when ringing a helpline. It is important that there should be greater understanding, sympathy and care in the Revenue departments for the people concerned. It is no use saying, "We should sack the people who handled this". They were handling complex issues, and making party political points is not helpful to the people concerned.
	One of the major recommendations of the Citizens Advice Bureaux report is that all adjustments to payments should be limited to ensure that claimants cannot be left with weekly incomes below minimum levels. That is an important recommendation. Will my noble friend say that that has been accepted and that the Revenue will be told that that must apply? We are dealing with people on the very lowest level of income. We do not want to see that made worse rather than better, which is the objective of the scheme.
	Of course, I appreciate that where there has been overpayment there is a case—I am glad that the Government have accepted it—for writing some of it off where serious administrative errors have been made by the Revenue. However, one has to recognise that we are dealing with many hundreds of millions of pounds of overpayment. Before we start writing off public money in that way, the Government have to be very careful that it is being written off in appropriate cases.
	As I say, and as we all know, the tax system is complex. Normally, it is in one year that a tax adjustment is made. If that happens, people with low levels of income can be forced to repay sums in a very short space of time. I would like an assurance from my noble friend that even though repayment may have to be spread over a longer period of time, it will be so spread in order to help the very people that we are trying to help.

Lord McKenzie of Luton: My Lords, I thank my noble friend for his questions. In relation to simplicity or complexity, in any construct of a tax system or a benefits system, there is always a challenge between getting things fair and making them simple. As regards the ability of, or the requirement for, people to understand the calculation, it is not necessary to understand precisely how the calculation works. It is important for people to understand the factors on which the calculation is based—family size, and so forth. The need to demonstrate and communicate that better has been recognised so that the components of the calculation are clearer. It is not beyond the capacity of most people to know the family income, the number of children and the composition of the household.
	Nor do I think that we should accept that the computer systems cannot cope with those arrangements. Clearly, there were failures at the start of the process which have now been addressed, and the system is now stable. If computer systems cannot cope with this, what sort of technological world are we living in?
	Recovery is important. For those recoveries that are made after the end of the year, the current code of practice says that no more than 10 per cent of the award can be deducted when people are on the maximum benefit. That increases to 100 per cent when people are on the minimum benefit. When people are in the taper, it is 25 per cent. There are more difficult concerns, which are recognised, when an overpayment is spotted during the year. Rather like the pay-as-you-earn system, the computer works to recover that immediately. But there are mechanisms in place to identify hardship and for there to be a reduction in what is claimed during the year.
	With regard to suspension of recoveries until there is a positive act of the claimant to challenge, there is a balance between what is fair to taxpayers in general and what is the right construct for a system of this nature. Where there is a dispute and a recognised error, the process can be halted, but not in every case. If a recovery or an overpayment has been identified, processes to recover it, provided that they are fair, ought to proceed as a natural part of the system.

The Earl of Northesk: My Lords, is it not the case that Ministers were somewhat selective in their presentation of the November 2002 Gateway Review of the tax credits IT system, highlighting such comments as the project being,
	"an exemplar of good programme management"?
	But is it not also the case that the Gateway Review emphasised that the project was high risk? To what extent at the time did Ministers factor that into its development? Is it not also the case that by November 2003, Nick Montague, then chairman of the Inland Revenue, in evidence to the Public Accounts Committee, blamed the tax credits fiasco on a failure of the systems? Is it not surprising that, in a year, what the Government had chosen to describe as,
	"an exemplar of good programme management",
	had become the villain of the piece?
	Moreover, the Statement implies that this sorry mess is just a little local difficulty that can be ironed out with a bit of tinkering round the edges. But are not the problems very much deeper and wider than that? For example, is it not the case, as revealed by Steve Lamey, chief information officer and a board director at HMRC, that the department sends about 30 million letters to wrong addresses each year, or that each of 72 tax offices process self-assessment forms in different ways? Even on separate floors within a single tax office there are sometimes different processes.
	Against that background, should not Ministers be a little less complacent and face the fact that, as Computer Weekly put it, the Revenue is riddled with "systemic failures"? Is it not time for a little humble pie—perhaps, even, as my noble friend Lady Noakes has suggested, an apology or two?

Lord McKenzie of Luton: My Lords, the noble Earl, Lord Northesk, raises a number of interesting points, but forgive me if I cannot immediately give a detailed answer to all of them. There was a wholly unexpected failure of the IT system, but that does not mean that the programme was badly managed overall. I do not believe that the Government have been complacent in the failures in the system. They have addressed it and have changed IT partners, as we discussed earlier. The system is now stable. Making sure that it remains so is an important part of the policy going forward.

Intellectual Property Rights

Baroness Buscombe: rose to ask Her Majesty's Government what steps they are taking to protect intellectual property rights for the creative industries.
	My Lords, before asking my Unstarred Question, I want to say that there is an element of Alice in Wonderland, when I look at the time allowed. The Order Paper states that we are time limited to one and a half hours, but that the time for speeches is expected to be limited to 10 minutes. There are precisely two speakers and the Minister—two times 10 makes 20, plus 12 minutes for the Minister makes 32—and we have one and a half hours. Perhaps the Government do not feel that intellectual property is important, but we do. However, sadly, I have culled my speech to 10 minutes.
	I am asking this Question in your Lordships' House today because I firmly believe that we are the best in the world as creators and originators of novel and inspirational works. Currently we are in the midst of an era which presents tremendous opportunities for commercial change and development in the creative industries as a whole. Solid intellectual property protection lies at the very epicentre of sustaining and promoting vibrant and fresh new works from the talented individuals of this country. As the noble Lord, Lord Evans, said only last week in response to a debate on the arts as a tool for urban regeneration:
	"the noble Baroness, Lady Buscombe, dealt with something that I believe goes to the heart of the matter; that is, intellectual property rights. As matters develop, it is becoming increasingly obvious that there is almost a need for new law to protect those important and developing rights.—[Official Report, 16/6/05; col. 1360.]
	There is no doubt that if we are to sustain our leading edge in the creative industries and to compete successfully in global markets, we must have effective IP protection. In particular, copyright management and effective protection is an issue which is central to the success of the creative industries. Moreover, over the past few years copyright has taken a front seat and concerns relating to the prolific and burgeoning industry in Internet downloads have been increasingly well publicised.
	The current legal framework has substance and a number of interventions from Europe has successfully modified our national provisions to cope with changes resulting from ever-improving electronic methods for sharing information. But are the Government doing enough to ensure that loopholes in the current legislative patchwork are quickly closed off and that a sensible review of potential future improvements, piracy being one such area, is being conducted in concert with the rest of Europe?
	It is vital that this important area is kept under the spotlight and it is for that very reason that I first tabled this Question over a year ago. During that period the Government have made strides to improve publicity and education in intellectual property matters. I agree with at least one aspect of their current strategy; that existing creators' rights require better and more effective enforcement, particularly in view of the increase in piracy. However, a recent proposal put forward by the Minister in another place, James Purnell, that,
	"the IP framework should be reviewed to determine if it is appropriate for the new age of fast-paced technological developments",
	is too ambiguous. Is the Minister just trying to backtrack with warm words following eye-catching announcements in the media heralding stronger IP protection? If so, he must know that this strategy can actually create uncertainty and instability in the marketplace, and is potentially harmful.
	While I agree wholeheartedly with any endeavour to draw out the industry's problems, my wonder is whether anything is being delivered. Moreover, are the Government paying attention to what the EU Commission is already doing? The Commission has itself launched very similar initiatives to look at the IP framework, albeit on an EU-wide scale.
	On that European note, this year, as a consequence of its Better Regulation initiative, the Commission will conduct further extensive reviews of a number of areas, including copyright. The Commission intends to review the practicalities of how copyright and related rights are commercially exploited on a day-to-day basis. Essentially, the fact that copyright is still largely administered on a national level leads to certain inherent inefficiencies in the regulation of rights-rich global media such as the Internet. For example, the way in which collecting societies do business in each of the EU member states may well come under scrutiny during the Commission's review.
	The Prime Minister's imminent presidency of the EU offers a gilt-edged opportunity to press our claim for stronger IP legislation and enforcement. This includes increasing the term of protection for sound recordings. Can the Minister confirm tonight that the Prime Minister will deliver on this opportunity?
	On the domestic front, the Government's announcement that they will help to fund a study to assess the viability and possible shape of a dedicated music council has been welcomed with open arms by the industry, but I urge a note of caution in that any partnership with government must not diminish the industry's freedom to question government policy and direction. I do not want to be a killjoy, but I urge the industry to ensure that this is not just another popular headline that serves to deflect genuine delivery.
	Talking of delivery, surely it is now time to deal with the duration of copyright for performances and sound recordings. An appropriate duration is fundamental to the ability of the music sector in Britain to continue to take a leading role, culturally and economically, on the international stage. While performers in the United States are assured of 95 years of protection, the rights of artists residing within the UK expire after just 50 years, and during their lifetime.
	How can a 50-year term be deemed proportionate when the songwriter enjoys copyright in his lyrics for a term of life plus 70 years? This obvious inequality serves to place our music industry on a weaker footing in comparison with other countries such as the USA. Even Guatemala and Honduras enjoy more extensive protection than us. The distinction in copyright term between Europe and the USA serves to confuse and bewilder artists and producers alike. The commercial impact of such an erosion of confidence in European legislation is that both performers and producers move abroad in search of better terms.
	This is a well known problem and one that causes commercial concern to the industry as a whole —and that includes composers and songwriters. The value is in the creative content. A timely and certain remedy must be found.
	I mention the industry "as a whole" for good reason. It is a common conception that only wealthy, multinational, commercial record companies and publishers suffer as a result of erosion in copyright value. It is this fallacy that brings about limited sympathy from the general public. However, the damage runs much deeper. The effect of reduced profits at the top of the tree means reduced budgets and tighter deals with original and creative composers, musicians and songwriters. Less chance, less opportunity and less prosperity is the harsh reality faced by this group of individuals. Funding new artists becomes harder and as a direct result talent may remain untapped, undiscovered or unfulfilled. Improvements in the extent and enforcement of copyright could very well serve to benefit everyone from the top down.
	This is about looking after our innovators. Providing for the benefit of the industry's major players ensures that we are better placed to extract and exploit the benefit of our strong individual talent base.
	I turn now to the infringement of intellectual property rights. In essence, it can take just one casually uploaded album or track to devastate the legal market for that recording. There is a perception that downloading music and film from the Internet is a victimless crime; this is simply not the case. There are essentially two aspects to consider: the first is the problem with our friends, colleagues and children downloading music from the Internet; the second is the more serious, well organised criminal syndicates which extract many millions from the music and film industries on a daily basis. Research indicates that the value of the black market in counterfeit and pirate DVDs was at least £600 million in 2004, with the figure for the music industry being very similar. Furthermore, over £320 million of music sales were lost over two years because of illegal downloading in this country.
	In relation to hardcore piracy and criminal activity, an opportunity to remedy the problem is being presented by the enforcement directive, due to become law in April 2006. There are concerns that the Government are delaying implementation of the damages provisions which will allow strong and dissuasive punishment for criminal activity. Can the Minister confirm that the enforcement directive is on course to enter the statute book as planned?
	But strong legislation is not the end of the problem. Effective enforcement is the last step in catching and prosecuting criminals. At present there is simply no incentive for poorly funded and understaffed trading standards offices to launch and persevere with long, drawn-out prosecutions against counterfeiters. The Government are simply not doing enough to help trading standards offices. More must be done on an urgent basis to send a message to criminal syndicates that they will be effectively prosecuted and that the risks are far from minimal. Trading standards offices must be properly funded.
	Also, the planned reform of the Patent Office is crucial to achieving an efficient and robust IP framework. The unmistakable challenge will always be that of how to ensure that we get a return on our investment, be that in artists and repertoire or research and development. The value of our inventions and creativity must not be allowed to ebb away through illegal copying. A central plank of government policy for the next few months should be in reforming the Patent Office into a strong, politically led champion of intellectual property. One of its core terms of reference could fall directly under the Labour Party manifesto commitment to,
	"ensure that content creators can protect their innovations in a digital age".
	If only I was allowed the time to touch upon so many more important concerns held by the wider industries. For those who make photography their life's work, protecting their copyright goes beyond the emotive; it is their livelihood. Without adequate protection the photographic image—tomorrow's cultural heritage—and those who create it will cease to have true value, and without adequate protection a profession dies. Photographers are concerned that, in the digital age, information supplied with the digital image about copyright and the creator is stripped away, often automatically, so that in a matter of moments the world is awash with "orphan" images.
	In addition, recent changes in design law have impacted upon design rights and copyright protection for products as diverse as clothing, toothbrushes and cars.
	Much of what I have said should, in an ideal world, be underpinned by a change in our consumer culture. One way of bringing that about is through better education, as the key to driving a healthy respect for intellectual property rights. We have to fund, teach and educate at an early age to enshrine the values of intellectual property as a bundle of rights that can be used as both a sword and a shield. In the words of David Arnold, Fellow of the British Academy of Composers and Songwriters and one of a new generation of exciting and innovative composers,
	"we need to teach young people that creativity has value".
	There is work to be done and I urge the Government to deliver.

Lord Clement-Jones: My Lords, I congratulate the noble Baroness, Lady Buscombe, on initiating this debate on a very important issue. I share her bafflement at the time limits—I see that she busted them quite successfully and I shall do the same probably—but I suspect that this is due to the Companion rather than to the Minister, who I am pleased to see is in his place today, contrary to the advanced billing.
	This debate is extremely active, both between countries and within countries. I came back from the United States this morning and, as one does, I picked up the literature that was lying around in the airport lounge. I have the intellectual property issue of the Technology Review, produced by MIT, in which two extremely distinguished professors of law—one at Stanford and the other at the University of Chicago, who are heavily engaged in this area—debate the potential outcome of the Grockster case, which is before the US Supreme Court. This case concerns downloading peer-to-peer, as it is called, on the Internet.
	In a sense, that case is a successor to the Napster case, although it is not about deriving a work from a central source but from other individuals—known as "file sharing". It is an extremely important case which, no doubt, will heavily affect us in due course. It is just one example of where the debate is raging.
	Another area concerns the debate which is raging between countries. WTO accession has meant that China and India will have to observe copyright law to a much greater extent. Many of the arguments between governments lie in trying to persuade some of the developing countries that it will improve business confidence if they observe copyright fully and will help direct inward investment to those countries. So copyright is extremely important both for international trade and for domestic creative industries.
	I have a long-standing interest in copyright. I used to work for a law firm which specialised in this area. We ran the Redwood case—the famous music copyright case—but unfortunately we lost it. I was also at London Weekend Television when, in the 1980s, it was involved in the thick of licensing and negotiating rights for what were then the new areas of video and satellite. The motto of copyright laws in those days was very much, "What is worth copying is worth protecting". Now, however, with new works that can be made from samples both of music and film, the world has become rather more complicated. We also, of course, had the debate over moral rights, particularly in the art world. They are now available under the EU copyright directive of 2000 and artists are entitled to payment on resale of their works.
	Many debates are taking place. I shall come to the issue of product counterfeiting in a moment—it is of extreme importance and of great concern to a number of industries—but I believe that it is the Internet which will in future pose the biggest challenge to copyright law. Copying is now so much easier. First it was text, then graphics, and now music downloads are quite commonplace. Soon film works will be downloadable as a matter of course when compression software and computer memory improve.
	This raises the issue—the subject of the US debate I mentioned earlier—of how much, to use the expression of Professor James Boyle, "digital barbed wire" is needed to put round original works and, by contrast, what should be allowable under the fair dealing provisions. What level of protection is appropriate and what are the key problems that need to be combated? For instance, what lessons for the future does the original Betamax case have for us? Limiting technology too much may lead to infringement but may also lead to beneficial uses.
	The newspapers in this country are currently full of details of the action that the British Phonographic Industry is taking against people—often very young people—for multiple copyright infringement through peer-to-peer music downloading. I believe that the BPI is right to take this action. Indeed, I believe that the action taken by the BPI, by FACT, by the Alliance Against Counterfeiting and Piracy and by other organisations is protecting in the correct fashion the rights of their members. But when it comes to enforcing judgments against parents—particularly where, out of ignorance, they did not really understand what their teenage children were doing—I hope that the settlements will not be too draconian. I believe that this is a very necessary form of public education but I hope that the BPI, in particular, is not too punitive when it enforces payment against these parents.
	As to Grockster, I very much hope that the rights of the film companies will be firmly upheld but, by the same token, I hope that the film companies will begin to establish—in the way that the music industry did with iTunes and other MP3 downloading charges—different legitimate forms of licensing for film works. It may be that the very complicated release dates—which go in stately fashion from theatrical release, to DVD, all the way through to terrestrial free broadcast—will need to incorporate a window which is applicable to the Internet and will allow people to download legally in the way that it is now possible to download music.
	It would be very useful to know whether the Government are considering the implications of these cases. I am sure the Minister will refer to this in the course of his winding-up speech and I look forward to it. I also hope that he will respond to the noble Baroness, Lady Buscombe, on the issue of the extension of the 50-year copyright rule on songs. We believe that the Government are favourably disposed towards it but we have not seen in hard black and white that that is the case. It is, of course, to some degree controversial, but I believe that there is a very good case to be made for international harmonisation. It seems fairly ludicrous that there is protection for 95 years in the United States and for only 50 years here.
	Quite apart from these issues, there are two areas in which urgent government action is vital. I refer, first, to the area of counterfeiting. I am reliably informed that this costs the creative industries something of the order of £11 billion in the UK and that the businesses concerned employ 1 million people. One of the puzzles is why Sections 107A and 198A of the Copyright, Designs and Patents Act 1988 have not been brought into play. They would give trading standards officers analogous rights to those which are available over trademarks. I do not understand why the Government have not brought those sections into effect. It is all very well for film companies and others to bring copyright infringement proceedings, but if those rights cannot be enforced by trading standards officers—for instance, over counterfeit DVDs—then surely that means they are not nearly as powerful as they should be.
	There are issues about what progress is being made regarding the EU harmonisation enforcement directive. I was interested that the noble Baroness, Lady Buscombe, mentioned this. The UK presidency will be important. The Secretary of State, Tessa Jowell, has said that the UK intends to use its presidency to have a debate about further rights and the enforcement of copyright for the creative industries. That will be extremely valuable. So I hope that progress will be made and that the Minister will address that point in his reply.
	There is a further issue of great importance to composers, particularly those who compose music for television programmes. When they are contracting with television and production companies—the BBC is an honourable exception—they have to contract with nominated publishers on rather disadvantageous terms. That is anti-competitive behaviour and it should be prohibited. I am in favour of copyright protection and contractual rights but not when there is not fair competition or there is coercive behaviour. That applies across the board. This is clearly an area in which Ofcom needs to be proactive; if it does not have the powers to be proactive, it should be given them. I should be grateful if the Minister could address that. What is probably needed is a code of practice prohibiting such behaviour.
	Finally, we need a better mechanism for the Government to stay abreast of these issues in a joined-up way. I was very interested in the provisional conclusions on the review of the Intellectual Property Advisory Committee's work. Can a reconstituted committee play a really effective role? If we are to make this a priority for our EU presidency, we need the best possible advice and all the right people on board.
	A few years ago, the creative industries intellectual property group, chaired by Kim Howells, produced an interesting report. It contained very interesting conclusions about public education in this area. That is important, and the noble Baroness, Lady Buscombe, rightly alluded to it, but it is only half the battle. We must ensure that those who wish to use samples to create further works of art on the back of existing copyright are not unduly disadvantaged. That will benefit the industry and ensure that the consumer is not overly burdened with rights. If we are to use our presidency to this end, there should be an effective body advising the Government in this respect. I hope that the Minister will address that in his reply as well.

Lord Sainsbury of Turville: My Lords, I am delighted to take part in this debate and to respond for the Government. The billing of my noble friend Lord McKenzie was on the basis that I was trying to come back from Brussels. In the event, I managed to do this with two minutes to spare.
	This is an extremely important and interesting area. I say to the noble Baroness, Lady Buscombe, that whatever the timing of the debate, the Government can show that they have been taking this issue very seriously for the past 18 months to two years, since we published the innovation report in November 2003. In it we made a major statement about the importance of intellectual property rights and of the Patent Office taking forward an agenda involving enforcement and education as part of the importance of this area in the knowledge economy. I am sure that the noble Baroness is aware that our manifesto contained a reference to intellectual property and the creative industries. I failed to see such a reference in the Conservative Party manifesto, but then it was, of course, a very short document.
	The noble Baroness has already highlighted the importance of intellectual property rights for the UK creative industries. Intellectual property is very much at the heart of the creative industries, so I welcome the opportunity to set out the Government's agenda in this area.
	For the purposes of this debate, I should like to make it clear that in talking about the creative industries, we are talking about music, film, software, publishing, design and broadcasting. These are all industries which depend critically on individual creativity, skill and talent as the starting point for their business success.
	The creative industries matter a great deal in our economy. They grew by an average of 6 per cent per annum between 1997 and 2002—twice the rate of the average growth for the whole economy during that period. Employment in the creative industries grew at a rate of 3 per cent per annum between 1997 and 2003, compared with 1 per cent for the economy as a whole.
	These figures, which are part of the statistical estimates for the creative industries compiled in August last year, are impressive. They show that the creative industries are an enormous asset to the UK and are growing very fast.
	The creative industries have, for some years, been facing the challenge of new technology—the digital revolution, including the expansion of the Internet and broadband roll-out. In a world where digital material can be passed over networks, including the Internet, almost instantaneously, the temptation for people to share music and other protected content illegally is great.
	The music industry has been at the forefront of seeing its traditional business models threatened by illegal uploading and downloading of its copyright material. New technology therefore means that it is much more difficult to protect IP and preserve business models of the past. There is, however, cause for optimism. We are seeing more and more creative sectors identify and embrace the opportunities of new technology to grow their business. The music industry is at the forefront of this transformation, with a marked expansion of legal download sites over the past year or so. A recent newspaper report suggested that the number of legal downloads could overtake illegal activity in the next 12 months. It looks as if the use of new business models and careful legal enforcement of IP is beginning to bring this problem under control, and we support the action which has been taken by the music industry to do so.
	On the protection of intellectual property rights, our recent business manifesto commitment clearly shows our strong commitment to tackle IP crime and other types of infringement. IP crime is a very serious threat, and a considerable amount of work has been done in recent years. That includes legislative changes in 2002 to increase the maximum penalties applying to copyright theft. In 2003, the law as it applies in the information society was clarified, and a new criminal offence to catch the most prolific illegal uploaders was created.
	As a result of the innovation report, which acknowledged the damage caused by IP crime to businesses dependent on IP, we set up the IP Crime Group, led by the Patent Office. This brings public sector enforcers and private sector right-holders together with government to deliver more effective enforcement on the ground.
	Last year we launched the IP Crime Strategy to underpin the work of the IP Crime Group. This year we published the first annual enforcement report, which will provide a firm base line from which we can measure the success of our future activity.
	We are also heavily engaged in setting up regional hubs for trading standards officers, modelled on the very successful one in the north-west. And we are refining the training resources available, something we specifically promised in the business manifesto. In the coming months, the results of better co-operation and co-ordination under the IP crime strategy will start showing.
	The creative industries are clearly helped by a commitment to deal with IP crime. However, in recognition of the challenges and opportunities faced by the creative industries as a result of rapid technological advance, I set up the Creative Industries Forum on Intellectual Property jointly with the former Minister for the Arts, Estelle Morris. The forum, comprising industry and other stakeholder interests as well as Ministers, set up three industry-chaired working groups to explore certain issues in more detail.

Lord Clement-Jones: My Lords, perhaps I may intervene before the Minister moves on too far. He has spoken about enforcement and the IP crime aspect, but, unless he is coming to it, he has not spoken about the activation of Sections 107A and 198A, which are crucial to the industry.

Lord Sainsbury of Turville: My Lords, I was going to come to that issue shortly, but perhaps I may help the noble Lord immediately. This has been an issue since 1994 when the Trade Marks Bill was enacted. Since then, it has not been enforced because a government regulation states that if more jobs are referred to trading standards, matching resources must be put into them. We are trying again to talk to all the relevant stakeholders to find a solution to this situation. I hope that we can bring forward legislation that allows us to put in the extra resources and make certain that the Act is enforced. It is a totally unsatisfactory situation. It has been going on since 1994 and it is about time that we brought it to a conclusion.
	To reiterate, the Government have set up the Creative Industries Forum on Intellectual Property. One of its working groups has been examining IP enforcement issues; another group has looked at better education about, and communication of, IP messages. We welcome the care with which these industry-chaired working groups have investigated these extremely important subjects. The forum has therefore done some useful work in these areas which we will be taking forward in the future. The Government will soon provide a response to the detailed recommendations that these working groups have produced.
	However, many of the recommendations on IP crime are linked to the work within the framework of the IP crime strategy. I am happy to announce that we will be establishing a subgroup of the IP crime group specifically for the creative industries, so that they have a voice at the heart of our strategy.
	However, not all infringements of copyright can, or should, amount to a crime. Most people agree that a different response is needed to deal with online infringement. The promotion of a better understanding of copyright, and the impact of this illegal activity on creators, many of whom are struggling artists at the beginning of promising careers, is one approach to online infringement. The education and communication working group of the forum has identified the need to ensure that messages are positive and empowering, relevant to people's lives, and not just negative and piracy-focused. We are looking very carefully at how we can take account of these ideas as we develop and expand our IP education programmes.
	In our manifesto, we also made a commitment to modernize copyright and intellectual property regimes. Our IP regime must, of course, be fit for a digital age, providing an appropriate and fair balance between the interests of different stakeholders. Creators, entrepreneurs and creative industries must be able to invest, knowing that they will be able to get a proper reward for their investment.
	This manifesto commitment was inspired by our concern that business opportunities, dependent on content protected by IP, are maximised for the benefit of all in the IP value chain. We are therefore delighted that the work that was started by the industry-chaired business opportunities working group of the Creative Industries Forum will be continuing.
	As this work continues, one of the most important issues facing those who are trying to maximise the benefits of new technology for the creative economy is the scope for using digital rights management. This can enable exciting new uses of protected content, while keeping it secure and deterring or preventing illegal use, such as online infringement. Apple's iTunes is just one example of effective use of digital rights management. It is relatively hidden, so most users will never notice the restrictions on use.
	As a means of giving consumers what they want in attractive new ways, digital rights management has much more to offer than we have seen so far. But issues such as interoperability and technical standards for digital rights management and other technologies and devices need to be considered.
	We will be carefully monitoring how this work develops and considering whether any other IP issues should be explored or addressed. As part of its response to the manifesto commitment, the Department of Trade and Industry will be working very closely with the Department for Culture, Media and Sport on a new project looking at intellectual property issues. Along with my honourable friend the Minister for Creative Industries, James Purnell, I will be chairing a high-level group of officials to drive this project forward. This will build on the very useful work that has already taken place in the forum. We do not envisage that this group will look again at recent copyright law changes or at any major changes to the IP regime. I recently heard people from some of the key creative sectors say that, since our work in 2003 on implementing the EC Directive on Copyright in the Information Society, copyright law in the UK is generally in a good state. We will be checking that no issues need to be addressed at this time.
	We are extremely pleased to be supporting a conference in the middle of our EU presidency looking at the creative economy. This will provide an opportunity to stimulate a dialogue throughout Europe on delivering value for all in the IP value chain, based on a robust but fair intellectual property regime. Many of the issues on which we have touched today are likely to be developed further at that conference.
	Perhaps I may deal with one or two of the specific issues that were raised in the debate—

Lord Clement-Jones: My Lords, I am sorry to interrupt the Minister again. There is a slight paradox here. He said that there is no intention to disturb the current state of copyright law in this country, yet the very subject matter of the conference that is planned for the middle of the UK presidency seems to be whether copyright protection is adequate. If it has already been decided that it is adequate, why is there to be a debate about it as part of the UK presidency?

Lord Sainsbury of Turville: My Lords, there are great concerns in the creative industries about this area, but the key issue is not the intellectual property rights or the legal framework—although we want to take another look at that to make certain that it is all right. The real concern lies with digital rights management and the business models that go with it. There is not a debate about who has the intellectual property rights, but there is a technical debate, as a result of the digital age, about how one controls the material. That is about business models and enforcement rather than the legal side. We need to debate that and make it clear.
	A question was raised about the support and increase in the term of protection for sound recordings. We have not made any decisions yet. We are looking at the issue, and we will be considering the impact on all stakeholders; that is, those who use sound recordings and consumers, as well as those who have rights in the recordings. I should point out that any change would require a change to the EC directive that harmonises all copyright terms across the EU. Therefore, no proposals are on the table at the moment to do this. So it would be a major change.
	A question was raised about the EC IP Enforcement Directive. UK law is largely consistent with the provisions in the EC IP Enforcement Directive, which was adopted last year. The main advantage of this directive is that it will bring the enforcement framework in some other member states up to the high levels that already exist in the UK. Later this year, we will be issuing a consultation paper on the changes that we think are necessary, so the directive will enter the statute book on time.
	Those were the major questions that were asked. There was a question about the Intellectual Property Advisory Committee. We are looking again at how we could restructure that. It has not achieved all that we hoped that it would achieve. The question is whether we should maintain a body outside the Patent Office, with a parallel policy-making process, or whether it should be firmly in the middle of the work of the Patent Office. We are now looking at that.
	The debate today has allowed a number of very important issues to be explored. We acknowledge the crucial role that the creative industries play in our economy—it is a major role these days. As I hope I have just shown very briefly, we have already made much progress on the IP issues that matter to this sector, but a lot more work is in the pipeline to permit the full potential of the digital revolution to be realised in this most important area of our economy.

Street Children in Latin America

Lord Alton of Liverpool: rose to ask Her Majesty's Government what representations they are making to the governments of Latin American countries about the plight of street children.
	My Lords, I thank all those who are going to participate in this evening's debate about the plight of the street children in Latin America. While we were in another place, the noble Baroness, Lady Golding, who is unable to be here tonight, and I, were the two founding chairman of the All-Party Group on Street Children. Other supporters of the group, including the noble Baroness, Lady Hooper, the noble Lord, Lord Clarke of Hampstead, and my noble friend Lord Hylton are also unable to be present this evening, but wish to be associated with the concerns that will be expressed today.
	I thank, in particular, the noble Lord, Lord Astor, and the noble Baroness, Lady Miller of Chilthorne Domer, who will be speaking from the Opposition Front Benches, and the noble Baroness particularly for the role that she plays as the very active joint chairman of the All-Party Group on Street Children. The noble Baroness, Lady Gibson, has also been an assiduous and committed member of that group. The noble Lord, Lord Hannay of Chiswick, will bring to the debate all his distinguished diplomatic experience but he will also bring some very important personal insights into the issue, through the outstanding work of his wife, who has raised large sums of money for the care and support of street children in Latin America, and his son's work, which I have seen in Sao Paulo.
	The noble Lord, Lord Brennan, brings his considerable experience of Latin America but in addition he comes to our debate as one of the country's foremost human rights lawyers. We also look forward to hearing from the Minister, the noble Lord, Lord Triesman, who will reply for the Government. I am indebted to him for being here today and for the interest that the Foreign and Commonwealth Office takes in these questions.
	I have been seeking to raise this question since early in 2004, when I visited some of the favelas in Rio, Sao Paulo and Recife, in Brazil. I went on behalf of Jubilee Action, a charity that emerged from Jubilee Campaign, which I helped to found 20 years ago. My report following that visit is published on the charity's website. Jubilee Campaign is the secretariat of the All-Party Group on Street Children. I particularly commend the work of its administrator, Mr Wilfred Wong, the human rights lawyer.
	In the autumn of 2004, following the publication of that report, colleagues from both Houses joined me in the Jubilee Room for the launch of a website, www.stopkillingchildren.com, which was simultaneously launched here and on Capitol Hill. The site details the fatalities which occur on a daily basis. In Brazil alone, it is estimated that between four and five children are killed each and every single day. I shall speak today about Brazil, but I know that other noble Lords will refer to the situation elsewhere, especially in countries such as Guatemala and Honduras.
	Since we launched the website, more than 600 cases have been listed. In Brazil, between four and five new cases are uncovered daily. I shall give some illustrations just from the past few weeks. On 14 June, a two year-old boy was shot dead near his home in the district of Manilha, in the municipality of Itaborai. On 10 June, a 14 year-old boy was shot dead with a .38 calibre pistol in the neighbourhood of Alto da Bela Vista, in the municipality of Cabo de Santo Agostinho, in the Pernambuco state. According to witnesses, three men shot the teenager and ran away on foot.
	On 9 June, a 12 year-old boy was found in a thicket in the neighbourhood of Pirineu, in the municipality of Varzea Grande. Reportedly, the victim was tortured, hanged and had his arms cut off. On 31 May, a 15 year-old male was shot dead at daybreak in front of a snack bar in the neighbourhood of Jardim Umuarama, in the city of Cuiaba. On 27 May, a 10 year-old boy was found dead; on 20 May, a nine year-old girl was raped and strangled; on 9 May, a six month-old girl was raped and killed; on 6 May, an eight month-old boy was beaten to death; on 2 April, a three year-old boy was raped and killed—and the list goes on and on.
	It stands as a rebuke to all the authorities that permit those crimes to occur, but it should also be a stimulus to us to take more decisive action. In the light of the cases that I have mentioned, and others that are referred to in my report, an American congressional committee will take evidence on the issue later this year. I particularly commend the work being undertaken by Congressmen Trent Franks, Chris Smith and Joe Pitts and that of Senator Sam Brownback. I hope that the UK will use similar opportunities to exert pressure for more effective measures to be taken to stop this haemorrhaging of young lives.
	It was in the 1990s that the world woke up to the horrifying reports of children being routinely shot dead on the streets of Brazil. Many had assumed that those days had been consigned to the pages of history. But as graphically illustrated by the cases on the website to which I referred, and by the film, "City of God", the carnage continues. It flourishes in a climate of fear, silence and official collusion. I began my own visit in Rio at the church of Our Lady of Candelaria, where in July 1993 six police officers opened fire on a group of street children, some as young as 11 years of age, who were sleeping in the doorways opposite the church. Today a small cross with the names of the boys who died has been erected in front of that church. But these are not historic events.
	As experts from Brazil's National Movement of Street Children say, some four or five adolescents are murdered daily, every 12 minutes a child is beaten, 4.5 million children under five are working and some 500,000 children are engaged in domestic labour. In 40 per cent of those crimes, the children are victims. The massive proliferation of small arms is a central cause. One of the movement's activists told me:
	"It is easier for a child to get a gun than to get a bus pass".
	Since Jubilee Action published my report, as part of an amnesty the authorities in Rio have started to offer cash sums for small arms handed into them. That is a welcome but nevertheless small start.
	Alongside the greater accessibility to guns, what has changed since the 1990s and has deepened the crisis is the emergence of a ruinous drugs culture. Formerly Brazil was simply a transit country for the notorious producers of Columbia, Bolivia and Peru, but today Brazil ranks only after the USA as the second biggest consumer of cocaine. In Rio's 680 favelas, where about 25 per cent of the 12 million people live, that has led to the emergence of no-go areas controlled by rival gangs, such as Red Command and Third Command, which organise and arm the children. Children as young as four have guns and are used as "little planes"—to use the local colloquialism and the jargon of the street—trafficking drugs and messages between sellers and buyers. Although there has been no formal declaration of war, the children are caught up in escalating violence. They are child soldiers by any other name.
	One young Englishman, Luke Dowdney, who received the MBE from Her Majesty the Queen last year, has undertaken some remarkable work in the favelas. In his book, Children of the Drug Trade: a Case Study of Children in Organised Armed Violence in Rio de Janeiro, he says that a child's chance of dying there is,
	"eight to nine times greater than in the Middle East".
	Although time will not permit me to describe the details of my report, I raised these matters with the authorities in Brazil. I must say that at state and city level, as distinct from governmental level, I found a great deal of complacency and unwillingness to recognise the reality of the situation. For instance, when I raised the issue with the deputy mayor of Rio, he said that the fundamental issues were "too sensitive" and that there was little point in talking to the military police, because those talks were not fruitful.
	Elsewhere in Brazil, the story is much the same. In Recife, an area called Santo Amaro, which is situated on the edge of the city, has one of the biggest favelas, and some of the worst violence in the city takes place there. In two years, 16 young people were shot or died as a result of either non-payment to pushers or from overdoses. The youngest urchin was just 10 years old. One of the workers in Santo Amaro had seen his three brothers killed, and one young woman whom I met had seen her brother gunned down.
	I was particularly moved to hear the tragic story of one of the mothers, who helps at the centre and who has now organised a women's movement there to combat the violence. She said:
	"While the killers are free, it is society that is in prison".
	In that small community alone, 80 people had been killed in just two years, including her own son, whose death was a result of mistaken identity. It was thought that he was involved in the drugs trade.
	Elsewhere in Recife is an area known as "Little Hell". We heard the appalling story of one young woman who became a prostitute and was taken there by four men. They gang-raped her, and when they had finished they killed her, gouged out her eyes, ripped out her heart and threw her like detritus into the sea.
	People from another leading agency told me of 15 killings in one town, Jabuatao, on the Sunday before we met them. They said that the authorities would claim that the children died at a dance, or some such pretext, but that they knew that,
	"it was assassination. 99 per cent of these crimes are never judged because investigators simply refuse to come out to the favelas".
	Brazil craves to be recognised as Latin America's leading nation; it says that it would like to become a permanent member of the UN Security Council. But if it cannot comply with basic treaty undertakings—it ratified the UN Convention on the Rights of the Child, for instance—let alone enforce its own model legislation on child protection, its reputation will be seriously compromised. The representative of one agency said to me:
	"The law says the child is a privileged person: the reality is that he is the prisoner".
	At the heart of the problem is a climate of fear and an unwillingness to speak out for fear of revenge. In Sao Paulo, Waldenia Paulino, a children's commissioner, denounced police officers who had accosted a courting couple, raped the girl and then shot her boyfriend. Faced with death threats, Paulino had to seek sanctuary outside the country.
	Shining a light on this darkness has become a near impossibility. When a brave journalist, Tim Lopez, who worked for Global Television Network, broadcast a report, he quickly disappeared, was tortured and then shot dead. Groups such as the National Movement for Street Children are extremely wary of documenting cases or providing data; that is understandable, because one member who gave an American journalist information about child killings was found dead the following day. One child protection agency told me that nobody is brought to justice and that,
	"The whole system is contaminated".
	It is hard for a European to comprehend fully how little value is attached to the sanctity of human life in the drug-running favelas in Brazil, yet I saw countless examples of Brazilians and others who have plunged themselves into practical projects to offer relief and help to children in the favelas and on the street. I was inspired by projects in the heart of areas where violence is all-pervasive. In Rio, for example, the Sao Martinho shelters, including those visited by the late Princess Diana and by John Major and Cherie Booth QC, are a superb example of love in action. They are financially supported by Jubilee Action.
	However, the men and women who give themselves tirelessly to these projects rightly insist that as well as addressing the symptoms, there needs to be a radical and concerted attack on the causes. These children are Brazil's future and without them Brazil has no future. I am grateful for the opportunity to raise their plight this evening.

Baroness Gibson of Market Rasen: My Lords, I thank the noble Lord, Lord Alton of Liverpool, for instigating this debate and sincerely congratulate him on the hard and constant work that he undertakes on behalf of street children.
	On 10 December 1948, the General Assembly of the United Nations adopted and proclaimed the Universal Declaration of Human Rights. On that day, I became eight years old. I was a wanted, loved, happy and lucky little girl, far, far removed from too many little girls and boys in Latin America today. In the UN declaration there are articles that should be very relevant to young children in Latin America. Article 5 states:
	"No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment".
	Article 25(2) states:
	"Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection".
	And Article 26 states:
	"Everyone has the right to education . . . Elementary education shall be compulsory".
	Those were laudable aims in 1948 and remain so today, but for the street children of Latin America they are merely words on a piece of paper. Their aims are a million miles away from these children's daily existence of fear, pain, brutality and degradation.
	Reading through the latest UN report, it is obvious that the UN is still working to improve the lives of all children, including street children. The report has a section on street children. It states:
	"The sexual abuse, exploitation and deaths of street children in Central America are widespread and increasing, despite its countries having ratified the Convention on the Rights of the Child. The problem is exacerbated by the fact that every year many thousands of births go unregistered. Without a birth certificate, families and individuals cannot access health, welfare or education services, and thereby become more vulnerable".
	The UN is currently looking at the system of registration of children's births and deaths and is providing funds to help improve this.
	One example given of the horrors that street children face is given in the report, and it is of Honduras. Since January 1998, more than 1,350 children and youths have been murdered. There is a suspicion that organised death squads with links to the security services could be responsible. The government of Honduras are setting up a special unit to investigate these deaths which will work closely with the NGA Casa Alianza in Central America and with other human rights organisations to tackle street crime and investigate unsolved deaths. I understand that the UK embassy in Honduras is monitoring the progress of this work.
	I turn now to some of the street children I have seen on recent visits to different countries. They include three young boys, about 12 years old, high as kites having sniffed glue, and this at 10 o'clock in the morning. They live permanently on the streets. They include a tiny girl, about five years old, playing a tiny battered fiddle while an older boy watched over her begging for money. And most distressing, they include a girl of about 12 trying to sell her body to tourists, watched over again by an older boy.
	The latter was in Brazil, a country with which I have had a love affair for years, since I studied Latin American politics as a mature student at Essex University in the 1970s. Brazil is a very large country, apparently 27 times as large as France—a statistic given to me in my university days. It ranges from the modern capital city of Brasilia through the carnivals of Rio to the wonders of the Amazon. The Brazilian economy is among the world's 10 largest, but it has one of the most unequal patterns of wealth distribution in the world. As the noble Lord, Lord Alton, has illustrated, sadly, there are numerous accounts of street children being killed in Brazil, and in many of these murders the police have been implicated. Too often, violence to street children is accepted—they are nuisances like rats or cockroaches and can be exterminated accordingly.
	Street children are often affected—caught up in—the widespread sexual exploitation of Brazilian children. Trafficking of women and children is rife in the Amazon basin of Brazil. Young girls are forced or deceived into becoming prostitutes and are "owned" by those who run bars and brothels. In an article dated 21 June 1993, Time magazine estimated that 25,000 girls have been forced into prostitution in remote mining villages in the Brazilian Amazon, and sometimes these girls are bought direct from their families.
	I had a glimpse of what is happening in this region myself while on holiday in the Amazon basin in 2003. The cruise ship on which we were travelling called in at Santarem, where I saw the young girl I mentioned earlier. A cruise ship arriving in a port in Brazil is a major event. The tourists are fair game in a small town with one paved main street, a large Catholic church and little else except mud streets with water running down each side and hundreds of hammocks for sale from breach stalls. The young girl was beautiful, as Brazilian children tend to be—black curls, olive skin, large dark eyes. She stood in a small square near to the largest of the open-air cafes and her pimp, a young man who looked in his late teens, stood nearby. She approached a number of men who were alone. To my knowledge she did not find a customer, but I am sure that she would find many at other times and on other days. Indeed her life may well depend on it.
	I had been expecting her appearance or the appearance of someone like her, because I knew that Santarem is one of the ports where child prostitution is rife and where instances of children being bought, or kidnapped, is commonplace. Additionally, I had talked about child prostitution in Brazil with members of the ship's crew who went there regularly and they knew of this prolific trade and of the bars and areas where young prostitutes were most likely to be found in the various ports of call. This child may not have been literally a street child—I do not know—but she was certainly in need of help and protection.
	The Brazilian Amazon is one of the world's wondrous places. The use of this magnificent river for travelling purposes, just as we use our roads, is fascinating, and the warm welcome given by the Brazilian people was heartening. But it is a region with a great deal of poverty. Most of those living by the river live in simple one-room huts on stilts. In winter, when the Amazon overflows, the people and the animals live together in the one room until the water subsides. These people are poor, very poor. It is little wonder that any means of raising money is considered, and too often children's bodies mean money.
	It is thousands of miles away from the capital city and the national government, but the Brazilian Government are well aware of the problem and have introduced measures to try to tackle it. However, the country is gigantic and the task enormous.
	I understand that President Lula is continuing the work in that area which President Cardoso began, with the establishment of a special secretariat for human rights that reports directly to the president. He is also working with the UN on this matter. The Brazilian Government's efforts are supported, I understand, by our Government, who are funding a number of projects aimed at tackling human rights issues. I would welcome the latest news from my noble friend the Minister on that assistance in his reply.
	Finally, I started and I finish with reference to the United Nations, whose role here is crucial. The UN should be the forum where such matters are discussed and where pressure is brought to bear and help is given to countries that have signed up to the UN convention. I understand that Brazil did so in 1990; but how much has happened in real terms since then?
	The Brazilian Government need every possible assistance in their efforts to tackle the immense problems that they face and to end the suffering and violation of the human rights of their children, especially their street children.

Lord Hannay of Chiswick: My Lords, the Unstarred Question on the Order Paper from my noble friend Lord Alton is particularly timely. Amidst all the rush of events that we discuss, we should not neglect the plight of the children of Latin America, which is a continuing reproach to the conscience of the international community. It is a reminder that while governments may negotiate and sign documents as worthy in their aspirations as the UN Convention on the Rights of the Child, to which the noble Baroness has just referred, signed as long ago as 1990, what really matters is the way in which they implement their commitments. That lags far behind.
	I am no expert on the detailed situation of children throughout Latin America, but as a result of an interest that I declare—that one of my sons has set up and runs an activity centre for 500 to 600 children in one of the most deprived parts of Sao Paulo in Brazil and also the work that my wife does to raise funds to support that organisation—I do have some direct knowledge of the challenges that children face in that country and of the need to prevent children gravitating towards the streets in the first place as well as the need to come to their assistance when they do so.
	The present administration of President Lula in Brazil has introduced a number of programmes that have somewhat improved the situation, but it still falls a long way short of what is needed, and such improvements as have been made remain extremely precarious. I am sure that it is right, and indeed necessary, that where the performance by governments in Latin America falls short of the international obligations into which they have freely entered, we should take those matters up with them and press the case for better policies and better performance. We should work closely with other European Union governments when we do so and expand the role that human rights play in the European Union's emerging common foreign and security policy.
	But we should take care when we make those representations to avoid a hectoring and didactic tone. We should remember that our own record on the treatment of children over the years has not been without blemish and that the social and economic problems that confront those governments in providing better support and protection for children are real ones that cannot be made to disappear overnight. Above all, if we are to criticise, we need at the same time to offer effective assistance. On that matter, I ask the Minister when he replies to give us some chapter and verse about DfID's programmes for dealing with the problems of street children in Latin America, our recent performance in that respect, and the plans for the future.
	Some time ago, when it was decided to reduce, and in some cases to remove, aid to what are called "middle income countries", concerns were expressed in this House about the impact on programmes for children in Latin America. Certain assurances were given that those programmes would not be negatively affected. I would like to hear how those assurances have been carried through. In truth, concepts such as middle income countries are statistical categories that bear little relation to conditions on the ground. I assure the Minister that if he visited some of the most deprived areas of Sao Paulo he would not think that he was in a middle income country. As we rightly devote great attention to the problems of Africa and what we can do to meet them, we must not forget those realities and the children of Latin America.
	I am often struck by the huge amount of goodwill and willingness to help among individuals and voluntary organisations in this country towards those who are less fortunately placed than ourselves. We saw that particularly at the time of the tsunami. It must not be limited to times of great crisis such as occurred then. Help to street children in Latin America needs to be professionally organised and directed if it is to be effective and welcome. What help, what information, what advice and what training will the Government give to assist the voluntary sector and to ensure that its efforts are well-directed and focused?
	I would not like to end this brief intervention without paying tribute to our Consul-General in Sao Paulo who, amidst his many duties, finds the time to support the work that my son is carrying out. That is a great encouragement. I hope that this evening we will hear a bit more about the wider picture and what the Government are planning to do in the months and years ahead to face up to this most serious and most moving problem of our times.

Lord Brennan: My Lords, in the first week of the recent war in Iraq, a 20 year-old soldier was killed. He was from California; he died in the service of the American nation; and he was a street child from Guatemala. He left his hostel; obtained education; wanted to join the army; and suffered that fate. That story tells us three things about street children: first, that they are human beings; secondly, that they can achieve progress with help; and, thirdly, that with that progress they can live and sometimes die the way we do in our ordinary society.
	I have the humble privilege of being the president of the Consortium for Street Children in this country. It embraces 37 charities and NGOs which serve to care for and work for the progress of street children in the widest sense of the phrase all over the world, but particularly in South America. Who are street children? There is the stereotype. Are they helpless children? Are they dangerous criminals? Are they heroic survivors? The answer probably is, "A mix of all three and more besides". They are homeless; they may or may not have families. They may live on the street all the time, or some of the time. They may live in shelters, or hospitals, or sometimes prisons for adults.
	How many are there in Latin America? The most conservative estimates put it at 8 million to 10 million. Should we do something about it? Who could gainsay the question? Of course we should. We should do something about it because it is our duty as a civilised country to do so ourselves and to help other countries with the problem to solve it. The Convention on the Rights of the Child requires states to support and enable families and communities to fulfil their role of caring for and nurturing children. If they cannot, Article 20 says:
	"A child, temporarily or permanently deprived of his or her family environment . . . shall be entitled to special protection and assistance provided by the State".
	That is the explicit requirement of Latin American states; it is the spiritual requirement of us as a friendly nation.
	What can we do? There are three pressing problems: violence and justice; sexual abuse and exploitation leading in many cases to HIV-AIDS; and, not to be forgotten, natural disasters. Let us take them in turn, dealing first with violence and the need for justice.
	It would be an unnerving surprise for us to note that the adult with whom a street child was most likely to come into contact in Latin America was a policeman, would it not? The policeman may beat, harass or sexually abuse them or shoot them dead—or in some cases be decent to them. That is the first step for progress. The Consortium for Street Children has produced an international manual for police training to do with street children, partly funded by the Foreign Office, for which we are extremely grateful. It applies all over the world and is in practice in a pilot project in Ethiopia and Bangladesh. We want to start a similar project in Guatemala this year, with funding. I invite the Minister to help in that regard. With a change in attitude by the police, you have a change in attitude to represent society.
	The second point is justice. The state of Honduras was taken to the Inter-American Commission and Court on Human Rights by Casa Alianza for locking up children of eight and 10 in adult prisons. The court condemned it. We must make sure that such practices do not happen. The consortium has a programme for juvenile justice all over the world, saying that we must treat the children with dignity and fairness. Violence is the keynote of such children's lives—suffering it and trying to avoid it. We must help.
	Another major problem is HIV/AIDS. When you are homeless—in the sense of familiarly homeless—and become promiscuous or are abused, the risk of HIV/AIDS is enormous. The children do not have a clinic to go to, a doctor to advise or a nurse to care. Nobody looks after them. The crime—I emphasise "crime"—of a sexually exploited boy or girl getting HIV/AIDS and being left by society to suffer it and die is unforgivable. I invite my noble friend to confirm that, in any programme for HIV/AIDS in Latin America to which we are a party or not, we will ask for a special report on what is being done for those children. We must also ask countries to stop sexual exploitation. It is disgusting—an outrage—and it has to stop.
	The last point is natural disasters. South America is a large continent given to major events—earthquakes, floods, hurricanes—where poor people can be bereft overnight of everything in their family life. In Honduras after 1998's Hurricane Mitch, the street children population of the capital increased within a week by 10 per cent, because no one could look after them. They were orphaned or abandoned. I invite my noble friend to mark that fact and accept that, after natural disasters, in future we will ask that money be specially directed at avoiding the problem.
	I have isolated three areas, but there are many more. Latin American countries stand to be criticised where appropriate but, generally speaking, they stand to be supported. The charities and NGOs from our country depend on foreign governments and systems in which to function properly. I have no doubt that my noble friend will want every ambassador, consul and embassy official in Latin America to try at least once a year or every few months to visit a street children programme. The humility that it will instil will inspire endeavour, and that is what we want. There should be daily representations if necessary.
	I shall finish with a question to Members of the House. To be alone, not to be cared for or cared about, and to live a life without hope would present to any one of us a terrible prospect, yet what prospect does it present to a child? All who speak in the debate rightly speak on behalf of our country in asking our Government to act. We are a decent nation with decent principles. We must expect our Government on our behalf to require, by representations to the governments of Latin America, help for street children.

Baroness Miller of Chilthorne Domer: My Lords, one thing that has struck me throughout the debate is not only the knowledge of previous speakers, but the extreme passion with which they have all spoken. I am extremely grateful to the noble Lord, Lord Alton, for securing the debate. Curiously, I am also grateful that the debate has come so much later than when he first tabled the Question, as the intervening months have given me a chance to visit projects in both Mexico and Ecuador.
	I am particularly struck by the fact that it is today that Sylvia Reyes, the director of Juconi—I have visited its project in Ecuador on a number of occasions, including this year—is going to Buckingham Palace to collect her well earned MBE for all her work. That work is not only in Ecuador, but in training in Juconi's way of working throughout the world, including recently in Afghanistan. I would like to talk a little more about that later.
	I should also briefly declare an interest as an honorary board member of that organisation and, as the noble Lord, Lord Alton, generously said, as joint chair of the All-Party Group on Street Children. While mentioning that all-party group, I should pay tribute to its secretary, Wilfred Wong, who is assiduous in enabling us to write to ambassadors when appropriate to express our opinion about children being murdered in Latin American countries.
	I want to go back to some points made by noble Lords. Perhaps one of the main points of the debate was made eloquently by the noble Lord, Lord Alton, when he talked about shining a light on this darkness. That is probably our main ability—to shine a light on the darkness of what is happening. We can ask ambassadors of countries to come in, as the Honduran ambassador did last year, and talk frankly to us about the problems, as he did. He accepted that Honduras had a great problem, and acknowledged the fact that the court and police systems there had a great deal to do. As noble Lords have rightly said, it is also our job to keep the pressure on governments to make sure that the police and court systems in their countries know that we intend to shine a light on that darkness, and that they cannot get away with killings unnoticed. That is the first step in dealing with some of these horrendous issues.
	Our second difficulty was mentioned by the noble Lord, Lord Hannay. Latin American countries are referred to as middle-income countries. I was equally struck by what I saw in Guayaquil. Once you have left the nicely-developed Malacon area and you get to the outer reaches it is nothing like a middle-income country. It certainly is as deprived as any country that you care to go to. Indeed, 80 per cent of the population of Ecuador live below the poverty line.
	Equally, when we visited Pueblo, about 60 miles from Mexico City, with Juconi and the IPU delegation last year, you were given the impression that you were not in a middle-income country, once you had left the city centre—Mexico is much wealthier than many of the countries that noble Lords have mentioned. However, Brazil and Mexico are often referred to as the "twin hubs" that will lead Latin America forward. We should look to them for some of the leads regarding how to deal with the issues that, perhaps, have concerned me more. That is the side that I have seen, as opposed to the more horrendous issues that noble Lords have been talking about.
	There is another side to street child life, which concerns those street children who often do have homes. They are not homeless, will not be subject to attacks by the police and may work occasionally in the market or on the streets, cleaning windscreens or selling flowers. Equally, they have little hope of breaking out of the cycle of poverty, because the education system in their countries is not in any way, shape or form, geared to enable a street child to go to school.
	I was particularly struck by the comments of the noble Baroness, Lady Gibson of Market Rasen, on the importance of having a birth certificate, an identity, as a first step to enabling some of those rights to education and health to be realised. Without those rights it is difficult, even for the child who is not exposed to violence and who is not locked up in prison, to make many steps forward in life.
	That is why I wish to return to the work of Juconi, because it works with the family as a whole when the child still lives at home. Juconi will identify the child as being on the street. Sometimes that child is there due to violence or abuse at home. Sometimes they are on the street simply because of the sheer poverty at home and they need to go out and earn some money to take home. Juconi goes into those homes and works with the child with the permission of the child and, sometimes, the willing participation of the adults—although that is not always the case.
	Sometimes that participation is somewhat unwilling to begin with and it is slow and painstaking work that Juconi carries out. But its idea is to mainstream that child back to the facilities that the two countries that it works in, Mexico and Ecuador, can offer. Both counties do offer a level of education. Indeed, if the children can access it and if Juconi can bring their levels of literacy and numeracy up to a point where they can reasonably enter school, they can return to mainstream education or enter it for the first time. It is a measure of the success of that project that a year ago its first child graduated from university. That is an achievement indeed.
	So that type of work, which is not dramatic, is extremely important. It is equally imperative that, in shining the light, the countries in which that work takes place choose to recognise the importance of such work and highlight that there is hope and a future if people choose to send their children to school. That may be combined with working in the markets because, realistically, it is not possible for all of those children suddenly to leave their work which brings in income for the families. However, they should, at least, have a space to work at home—whether it is a shelf to the side of the bed, or whatever; and space is often at a premium. Homework and so on should be encouraged, so that they can take a step forward.
	I met a young reporter called Daniel Postini while I was in Ecuador. He was a photographer for the Expreso newspaper in Guayaquil. It was his mission in life to bring to the fore what it was like to live in some of the shanty towns that surround Guayaquil and what might be done to take a step forward. He was there to photograph the children who were displaying their works of art at an exhibition. In talking to him and the children, I was struck by the fact that the children were similar to any other children. Their artwork was exciting, but the subjects were similar to what might be seen in England—for example, "My birthday party", "My trip to see granny in the country". The difference was quite heart-rending, when it was explained to me that, mostly, their artwork was actually dreams of what they desired.
	But for some of them, their dreams were about attending school and having a school uniform. That can be realised. I look forward to hearing the Minister say what contributions DfID can make and the difference that the ambassadors in the two countries that I visited have made—Denise Holt in Mexico and Richard Lewington in Ecuador—to encouraging the work of NGOs and the governments of those countries and furthering the mainstreaming of all children into education. That would be a major step forward.

Lord Astor of Hever: My Lords, I, too, congratulate the noble Lord, Lord Alton, on securing this important debate and on giving the House the opportunity to discuss the plight of street children in Latin America. It has been a most interesting and informed discussion, one that follows on well from the more general debate on developments in Latin America, led by my noble friend Lady Hooper on 26 May.
	As my noble friend Lady Rawlings stated in that debate, with Her Majesty's Government's focus on the problems of Africa, it is all too easy to forget that there are problems that are just as serious and urgent in other parts of the world. It is essential that this House keeps a spotlight on these other areas, especially when there are more people in Asia and South America who subsist on less than a dollar a day than there are in Africa.
	It is clear from the debate on 26 May that, despite the unrest that we have witnessed in Bolivia and the continual problems of internal armed conflict in countries such as Columbia, Mexico and Brazil are, as the BBC once put it, "gentle giants awakening". They are areas where political stability is working hand in hand with a growing economy, enabling both countries to look outwards and to help anchor the continent as a whole. Let us hope that that remains the case after Mexico's presidential elections next year.
	So, some steps, if faltering, are being taken by the member countries of Latin America. However, these nations will not develop the international respect to which they aspire without addressing the shocking human rights violations that are carried out in their societies. The plight of the street children has been passionately demonstrated by your Lordships. It is clear that, while Brazil is the most cited example of a country's failure to address its commitments to the UN Convention on the Rights of the Child, it is not by any means the only one. Guatemala and Honduras, as the noble Lord, Lord Alton, mentioned, are examples, too.
	Although Brazil has failed to produce 13 reports under the six core United Nations human rights treaties, 226 reports are overdue from various other nations under the UN Convention on the Rights of the Child. Being forced to produce the reports, those nations are compelled to look at the issues and to address the failings of their systems. I wonder whether Her Majesty's Government are taking any steps to help to address the issue.
	The sharp contrast of wealth distribution is visually brought home by the sight of shanty towns next to the air-conditioned homes of the elite, particularly in the otherwise beautiful city of Rio de Janeiro. In Brazil there are an estimated 25 million deprived children and around 8 million of them live on the streets.
	As the noble Lord, Lord Alton, has highlighted, the proliferation of drugs and small arms means that around four to five children and adolescents are murdered in Brazil every day. In Guatemala City alone, there are, on average, two violent murders of children a day and last year there was a total of 847. The Honduran Government have officially recorded 1,030 children under 18 killed since 1998, although NGOs report a figure closer to 2,500.
	It appears that few have been held accountable and brought to justice for those deaths. Despite moves toward a more civil society, the apparent impunity with which perpetrators of such crimes operate—they are often police or security officers—shows a distressing lack of political will and transparency to deal with the issue seriously.
	The horrors of the figures that I have just mentioned exclude those who die from sexually transmitted diseases and HIV/AIDS following enforced prostitution, a subject mentioned by the noble Baroness, Lady Gibson, and the noble Lord, Lord Brennan. In Brazil's two biggest cities there are an estimated 150,000 child prostitutes, boys and girls as young as eight years old, controlled by strong organised mafia.
	Will the Minister inform the House what advice and resources the Government have supplied to the Latin American countries to help to train specialised police units to investigate sex offences against children? What anti-corruption support are they providing to help to hold to account police officers and politicians involved in such despicable schemes?
	Corporate social responsibility is an important approach in helping to tackle this distressing issue from afar. Will the Minister inform the House of any government-led or sponsored trade missions run by the British Council or any other organisations to raise the issue with companies in Latin American countries? What steps are Her Majesty's Government taking to ensure that they have no dealings with companies and organisations which are known to profit from the use of drugs? What pressure are the Government putting on respective governments to assess the gun ownership and illegal trade in small arms within their countries?
	What response has Her Majesty's Government taken in response to the Jubilee campaign's call for public information campaigns to promote understanding and sympathy for the situation of street children in Latin American countries? Many NGOs provide street children with the necessary shelter from violence and sexual exploitation. They provide food, clothing, medical treatment and, most importantly, general educational and training programmes to help to get them off the street.
	I was most impressed by the description given by the noble Lord, Lord Brennan, of the wonderful work that his consortium is doing there. I want to reinforce the question raised by the noble Lord, Lord Hannay, about the pledges of DfID in this area and how they have been carried out.
	Finally, I hope that the Minister will confirm that during the G8 summit some time will be made to discuss vital needs of the poverty stricken street children of Latin America. After all, as the noble Lord, Lord Hannay, rightly said, this issue is a continual reproach to the conscience of the international community.

Lord Triesman: My Lords, like other noble Lords, I thank the noble Lord, Lord Alton, for giving us the opportunity to discuss the plight of street children in Latin America. Again, he has demonstrated, as he so often does, his considerable personal knowledge. That knowledge has been of great benefit to the House and I thank him for it. I am also grateful to all noble Lords who contributed to the debate. We have had a good deal of sharing of knowledge and compassion but knowledge and compassion are plainly not enough.
	As the Minister with responsibilities for Latin America, I am encouraged to see the interest in that region in this House. We have had two debates in a very short period—within a month—which I welcome. I say to the noble Lords, Lord Hannay and Lord Astor, that of course Africa is vital to the G8 discussions for all the reasons of which we are aware, but that will not distract us from Latin America and these issues. These issues do not go away because we have that concern.
	In general, the rights of children worldwide are a central part of our human rights policy. I stress that that is the Government's position. As my noble friend Lord Brennan reminds us, it is also our responsibility, as a civilised people in a civilised society, through charities, government and all parts of our society, to realise that we have obligations and ethical responsibilities. During the debate, my noble friend and others illustrated the values that underpin that, for which I thank them.
	Poverty, unemployment and social dislocation leave many children with no option other than to leave home. On the streets they are often excluded from accessing key services such as health and education and they lack the support that most of us assume we shall have in life of kinship and social networks. Many suffer and are at greater risk from organised violence, trafficking, sexual exploitation, enforced prostitution and HIV/AIDS. In addition, poor police training—in some places I suspect there is no police training—low salaries and weak judiciaries can exacerbate the problems. It is the underlying causes of deprivation and exclusion, as well as the requirement for police and judicial reform, that need to be tackled if there is to be a serious long-term solution.
	The noble Lord, Lord Astor, was right to say that the growing economies of the continent are fundamental if they are to make progress at all. Yet there is so much more to do because so much is going wrong. Reports are required from many countries. In response to one point raised, we try to monitor against the criteria set out in the Convention on the Rights of the Child, because that is the most widely ratified of all the core human rights treaties and because monitoring is needed as implementation is so patchy.
	The UN Committee on the Rights of the Child considers implementation of the convention. We have supported training for NGOs—this is a direct response to the point raised by the noble Lord—to improve the quality of all shadow reporting to the committee. That means that the committee receives fuller pictures, year-by-year, of the situation on the ground in any state party. That includes, in our case, work done with the NGOs in Belize, Bolivia, Costa Rica, Ecuador, Nicaragua, Trinidad and Tobago and, of course, Brazil, which is at least making efforts to be up to date in its reporting.
	The noble Lord, Lord Hannay, asked us what we are doing. The Government see a broad agenda that we must tackle when we approach the plight of street children in the region. That can be pursued both in lobbying and influencing and in direct support to project work.
	I turn first to poverty. I should like say a little about the exceptional work that my colleagues in DfID are doing. Our contributions to multilateral institutions for work in Latin America amount to about £100 million a year. An annual bilateral programme of £11 million will complement that by helping the Inter-American Development Bank and the World Bank to improve their ability to tackle poverty, inequality and inclusion in their programmes. It also supports efforts to improve donor harmonisation and the effectiveness of government poverty reduction strategies to include social exclusion and child poverty. Our contributions to the European Commission, rightly emphasised by the noble Lord, Lord Hannay, are also assisting them to implement a social cohesion programme in Latin America.
	We also recognise the important role of civil society, which has been demonstrated so clearly by all noble Lords speaking in the debate. We also support that. On the lobbying front, I can assure the House that we have made clear to the governments of Latin America, bilaterally and with our EU partners—in our presidency of the EU, given my responsibilities, I will certainly continue to do so—the importance we attach to respect for human rights and, at the heart of those, the rights of children. Together with our European partners, we continue to call for all states parties to the Convention on the Rights of the Child to implement their reporting obligations.
	I was pleased that my noble friend Lady Gibson drew attention to the convention and our responsibilities to the UN. After all, that is a cornerstone. The UN is still working on those issues—and still failing, I suppose, with regret, I must say; but still working. We closely monitor progress. In some areas progress is being made in countries in the region where there is concern, including in Central America and Brazil.
	Perhaps I could talk about a few countries to illustrate the point. The noble Lord, Lord Alton, talked about the Jubilee campaign and illustrated it with Brazil, and other noble Lords mentioned Brazil. The noble Lord described a harrowing, terrifying list—a catalogue—of degradation and lack of value attached to children's lives. In the article to which he referred, which I read with interest—actually, interest is too pallid a word; it is a moving article—he made the point that in the absence of gravestones the website provides the only documentary evidence of the children's lives that have been lost, of children's deaths. He is right to ensure that these issues are not forgotten.
	My noble friend Lady Gibson was right to say that the Brazilian Government recognise the scale of the problem, but it is below governmental level where there is evidently much work to be done. According to the latest report of Brazil to the UN Committee on the Rights of the Child, major problems exist in the realisation of children's rights. Those are the effects of, inter alia, unequal social structure, the growing incidence of early pregnancy and child labour.
	There are also a number of positive developments; for example, a decrease in infant mortality and a significant expansion of primary school education. Brazil has introduced a number of programmes, such as the Family Grant, the Zero Hunger Programme and the Programme for the Eradication of Child Labour. However, all of that does not remove the problem, which was so powerfully illustrated by the noble Lord, Lord Hannay, when he described the work of members of his family and the NGO work that is essential.
	We engage frequently with the Brazilian Government on all those issues, both bilaterally and through the European Union, on a broad range of human rights issues, including about the situation of street children. The Government have funded a number of projects in the human rights field in Brazil, including tackling some of the more pressing problems of violence in the slums of Rio de Janeiro.
	A priority area for projects in 2005–06 is the promotion of child rights in that context. Our embassy in Brasilia is currently in discussion with the Brazilian Government on how they can assist in developing a training programme to build vital capacity among the Brazilian judiciary in the areas of juvenile justice and young offenders. That infrastructure is plainly vital, as this debate has illustrated.
	In Ecuador, to which the noble Baroness, Lady Miller, referred, unofficial statistics suggest that there are 1 million working children there, of whom 5,000 are street children or at social risk. For several years, our Embassy in Ecuador has assisted JUCONI—the Junto Con Ninos—which is one of the main NGOs working in this area. Incidentally, the Mexican embassy is engaged in a similar way in Mexico. As the noble Baroness said, JUCONI's main challenge is to get street children—in many cases the family breadwinners—back into education, by providing family support and encouragement. It was really good to hear that the first of those children has got to university. That is surely lighting a light in that country. I congratulate the noble Baroness on her work there.
	In Central America, we have raised concerns about issues in those countries. Our embassies maintain close contact with the region's governments, non-governmental organisations dealing with child protection, and other members of civil society. We regularly voice our concerns bilaterally and, as I said, with our EU partners. The problem in Central America is plainly made much worse by youth gangs, the Maras, as they are called, which are responsible for violence and increasing crime throughout the area. Young people and children, frequently from broken homes, may join those gangs when they are very young—as was said, they are almost a child army—sometimes when they are no more than 10 or 11 years old, to try to gain a sense of community and personal protection.
	Studies have shown that young people are often desperate to leave the gangs but reintegration into the mainstream of society is difficult, especially for those with visible tattoos. It has been almost impossible for them. With no prospects of employment, many young people remain locked into the vicious cycle of crime and drug dependency that inevitably brings them into conflict with the law.
	We have provided support for many local projects in Central America to help protect children and fund equipment as well as to support training for local police forces across the region. DfID has also supported government programmes to strengthen social services, improve conditions and protect vulnerable children. That is a significant part of DfID's programmes across the continent.
	My noble friend Lady Gibson also drew attention to Honduras, which has been particularly affected by gang violence. Examples of work that we have supported there include assistance in setting up a government special investigative unit for deaths of minors and a community policing project on children in conflict in conjunction with Save the Children. We have also funded a study by the Children's Legal Centre at Essex University, with which my noble friend will be familiar, to investigate the juvenile justice system. The final report of that study, which is being undertaken by a very good group of academics there, will be launched in September 2005 at a regional conference on children in conflict with the law and will guide future legislation in this important area.
	During 2004, DfID gave Honduras £1 million to support its poverty reduction strategy, including the analysis of child poverty and the plight of street children. The strategy commits the government to reduce child labour, improve the quality and equity of education and improve child health coverage. Our embassy is monitoring that.
	In Guatemala, where we understand from Casa Alianza that in Guatemala City alone there are some 4,500 street children, we have funded the research and publishing of a manual to train the local police force in child rights and child protection, with particular focus on street children. This work was carried out with the NGO, Consortium for Street Children. We have funded Casa Alianza's work to refurbish a home for former street children and a shelter for sexually abused children with the human rights ombudsman office.
	As I briefly summarise those national examples, I feel compelled to admit that training of police forces and the judiciary are very important steps into which we should put resources. That will not stop wicked people from being wicked, I fear, but it is a means of ensuring that we intervene as purposefully as possible in those areas.
	In response to the noble Lord, Lord Hannay, we are working hard on voluntary-sector training to boost its excellent efforts as much as possible. DfID and the FCO work substantially with the local NGOs in programme delivery—largely because they are the best placed organisations to deliver those programmes—and to help to build their capacities. Examples include Casa Alianza, in Central America; ChildHope International, in Brazil; and projects in Venezuela and elsewhere. There is a long list, which I shall not go through, but it is serious.
	In response to my noble friend Lord Brennan, the Guatemala project is also deeply involved with the local NGOs in training the local police in child rights. It is another area where that specific problem is being addressed.
	Most of the reports that we have heard today are truly shocking. It is sad to have to admit that there are no quick fixes or magic solutions. The noble Lord, Lord Astor, raised some of the central problems about small arms. Although it is no quick fix, my right honourable friend in another place Jack Straw is promoting the international small arms treaty in an attempt to get some control of those issues. As I said earlier, the underlying causes are the deeper issues of poverty, inequality, social exclusion and, as the noble Lord, Lord Alton, rightly says, the acute problem of drugs and drugs trafficking.
	If I quote Nelson Mandela accurately, those are all blights caused by human beings. Of course, natural disasters are not blights made by human beings but they add to and compound the misery of what we do to ourselves as human beings. We have real ethical obligations in that regard.
	The noble Lord, Lord Astor, asked what we would do about corruption in companies and governments. At the G8 summit the issue of anti-corruption and good governance in governments is fundamental to the whole package concerning debt write-off and aid. Our own legislation is fundamental to dealing with and penalising corruption. As I have said, we are working in all those spheres to assist Latin America in that broad agenda and trying to tackle the more specific issues related to street children. The noble Lord, Lord Hannay, can rest assured that we will pursue that role with our partners in Europe during our European presidency and beyond.
	I can say to the noble Lord, Lord Brennan, that I will seek to ensure that our HIV/AIDS programmes include special reports on the position of children. I will discuss that both in my own department and with DfID. I will also discuss visits to street children. As I am sure noble Lords know, many visits already occur, but I will ask what the programmes are, as I am as keen to know the answer to that question as I know the noble Lord is.
	Governments in the region recognise the root causes of the problem, and some are making progress. We will continue to encourage and assist them to make more progress. We must go beyond knowledge and compassion to make progress. We will only let ourselves down if we do not do that.

Liverpool City Council (Prohibition of Smoking in Places of Work) Bill [HL]

London Local Authorities (Prohibition of Smoking in Places of Work) Bill [HL]

Message brought from the Commons, That they concur with the resolutions of this House of 19 May.
	House adjourned at twenty-seven minutes before eight o'clock.
	The first three Written Statements should have been printed on Tuesday, 21 June.